Nigeria plans N395b debt deals in third quarter

The Federal Government has unveiled plans to increase its local currency-denominated debt profile to between N305 and N395 billion in the third quarter of the year.

The components of the debt plan include floating new one and reopening of the country’s major bonds- FGN JUL 2021; 12.50 per cent FGN JAN 2026; and 12.40 per cent FGN MAR 2036.

Government planned to raise N900 billion for the 2016 budget deficit estimated at about N2.2 trillion through domestic borrowings, with the rest to come from external debt deals.

Also, the planned debt deals have maturities ranging from five to 20 years, according to the Debt Management Office (DMO).

For a start, the Federal Government may kick-off the third quarter debt obligations with N94 billion by next week, using the treasury bills.

The debt instruments will be made up of three-month, six-month and one-year maturities, worth N19 billion, N25 billion and N50 billion respectively.

In a Reuters report, the debt office said it would auction between N105 billion and N135 billion worth of bonds maturing in 2021, 2026 and 2036 in July; N95 billion and N125 billion worth of same debt in August; and N105 and N135 billion worth of the paper in September.

DMO in its latest debt issuance calendar said the 2021 paper was a new issue, while the 2026 and 2036 maturing papers are to be re-opened.

Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

Meanwhile, the Central Bank of Nigeria and Citibank yesterday executed the country’s first Naira-settled Futures trade against the dollar.

The apex bank introduced an over-the-counter futures market on the currency, to help manage dollar demand, quoting the naira firmer at N279 to the dollar in a month’s time and at N210 by April next year.

However, the rate at which yesterday’s futures deal was done and the size of the trade was not disclosed.

The bank had last week auctioned $3.5 billion on the futures market to clear a backlog of currency demand after it lifted its 16-month-old peg to allow the naira to trade freely on the interbank market.

It sold $697 million in one-month futures, $1.22 billion in two-month contract and $1.57 billion due in three months, in order to clear a backlog of $4.02 billion of demand.

In the non-deliverable forwards market, the naira rose against the dollar yesterday, with the one-month contract quoting the currency at N283, converging almost with the spot market, which traded at N282.