See How Much FG Plans to Borrow in First Three Months of 2016

Posted by Lolade on Tue 12th Jan, 2016 - tori.ng

The Debt Management Office has revealed the amount of debt the Federal Government has planned to secure in the first three months of the year.

Nigeria's Coat of Arms

The Federal Government is set to borrow between N260 billion and N390 billion in the first three months of 2016, the Debt Management Office (DMO), said on Monday, January 11.

It said the long-term borrowing would come in five, 10 and 20-year local denominated bonds.

The DMO said it would sell within the range of N40 to N60 billion in the bond maturing in 2020 in January and February and N20 to N30 billion of same tenor paper in March.

The debt body will issue within the range of N40 to N60 billion of the 2026 paper in each of the first three months of the year and N40 to N60 billion in a fresh 2036 paper in March. Nigeria said it will borrow about N900 billion locally to finance part of the N2.2 trillion deficits in its 2016 budget.

Analysts said the government’s proposed N6.08 trillion budget for the 2016 fiscal year, has N1.84 trillion deficit financing targeted mainly at infrastructure development to be funded through borrowing.

The Managing Director, Afrinvest West Africa Plc, Ike Chioke, said the performance of the Nigerian bond market was majorly bearish last week as investors freed up liquidity to meet up with the bond auction.

He said the market condition was also affected by increased mopped up exercise and foreign exchange intervention provisioning of last week. The action prompted the average bond yields to close last week at 10.7 per cent from an average of 9.8 per cent a week ago.

The sell-offs in the market was noticed across all bond tenors on all trading days. The bearish sentiments can be attributable to the decline in liquidity levels given the series of Central Bank of Nigeria (CBN) Open Market Operations (OMO) mop-ups that took place last week and the N136.2 billion worth of Treasury Bills auction that took place last Thursday.

“We expect an increase in average yields as the DMO embarks on its monthly bond auction for January together with further decline in market liquidity if the CBN continues its mop up activities,” he said.