The Federal Government has said it plans to re-issue its five- and 10-year bonds in the last quarter of 2015 to raise up to N270 billion after JP Morgan’s index on Wednesday delisted half of Nigeria’s maturities.
Meanwhile, the Central Bank of Nigeria, CBN, has raised concerns over the continued slow down of the country’s economic growth.
The 10-year bond, among those to be delisted on the influential index, edged higher to yield 15.09 per cent after the Debt Management Office (DMO) on Wednesday released its calendar showing it will re-introduce the benchmark paper, which was not issued in the third quarter.
The DMO said it will sell between 60 billion naira and 90 billion naira each in five- and 10-year bonds in each of the remaining three months of the year as reopenings of outstanding maturities.
Traders said bond yields were muted on Wednesday as foreign buyers had cut their exposure to 0.69 per cent ahead of the index expulsion.
The 2024 bond to be issued from October will pay a coupon of 14.20 per cent while the 2020 paper will pay 15.54 per cent.
The central bank on Wednesday also said the banking system had enough liquidity to take up what foreign investors might sell after JP Morgan removed Nigeria from its bond index.
The CBN plans to retain foreign currency controls because of concerns about slowing growth, a senior bank official said on Wednesday.
Growth was 2.35 percent in the second quarter year on year, compared with 6.54 in the same quarter of 2014.
“We are concerned that we are having declining growth,” Moses Tule, the Central Bank’s monetary policy director, told reporters.
He defended the bank’s decision to impose currency controls to preserve foreign reserves, which fell 23 per cent in the year to Sept. 23, central bank data showed.
“We have to protect the nation before we protect businesses,” Tule told a conference in Lagos where he came under fire from executives complaining the dollar controls were hurting their businesses.
Import duty collections fell 8.8 percent to 650.74 billion naira ($3.3 billion) in the first nine months.
Tule said the bank’s decision last week to cut the cash reserve ratio to 25 percent from 31 percent had injected 300 billion naira into the financial system.
Prior to the move, liquidity on the interbank market had dried up after banks were ordered to move government revenue to a single account at the Central Bank, part of Buhari’s anti-graft drive.
“There’s sufficient liquidity in the Nigerian banking system to take up whatever foreign investors may dump, so we are not disturbed,” he said.
Recall that the Central Bank Governor, Godwin Emefiele said last week the economy might slip into recession in 2016.
The Central Bank adjusted its exchange rate peg on Wednesday to 196.95 naira against the dollar, from the 197 set in July – the sixth adjustment since the introduction of tight controls on the foreign exchange market in February.