Nigeria Hikes Rate on Reopened 7-Year Bond to 18%

Nigeria Hikes Rate on Reopened 7-Year Bond to 18%

Nigeria has increased the interest rate on 7-year reopened local bonds by 2.10% to 18%, details from Debt Management Office (DMO) auction results revealed. The authority opened N200 billion in local bonds for subscription at the primary market auction for the month of August, a sharp increase compared with N80 billion offer size in July.

The auction featured a new local bond, which is to expire in Aug 2030, and the reopening of FGN papers, which is expected to mature in Jun 2032. Total subscription printed at N268.17 billion across the two offer size. 

The DMO auction results revealed investors showed a preference for reopened local bonds, attracting a total subscription of N165.81 billion against N100 billion offer for subscription.

Despite significantly lower subscriptions from investors, the DMO undersold bonds that were offered at the auction with a surprise increase in the spot rate on the reopened paper. The new bond issuance attracted a sum of N102.36 billion in subscription from investors, a marginal increase from N100 billion offered for sale at the auction.

DMO allotted N46.005 billion to investors that bid for FGN bond, which is to mature in 2030 at the spot rate of 17.945%, rejecting the remaining subscription.The authority raised N165.81 billion from reopened local bonds and hiked the spot rate by 2.10% to 18%.

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