By Ademola Alawiye with agency report

The Debt Management Office said on Thursday that it sold N60bn ($383.3m) in five-year and three-year sovereign bonds at its third debt auction of the year, adding that the yields edged higher than the previous auction in February.

The debt office added that it sold N30bn each of the 5-year and three-year paper at an auction on Wednesday, with marginal rates of 12 per cent and 10.50 per cent respectively.

The five-year bonds were issued at a marginal rate of 11 per cent last month, while the three-year papers were issued at 9.25 per cent.

The three-year paper is a new issue, while the five-year paper is a reopening of the previous issue.

The debt office said in a statement, “However, the original coupon rates of four per cent for the five-year will be maintained, while the coupon rate for the three-year is set at 10.50 per cent. Total subscription stood at N102.27bn compared to N140bn last month.”

Reuters quoted analysts as saying, “Unrelenting pressure on Nigeria’s naira currency, which hit its weakest levels against the dollar in more than 18 months this week due partly to political uncertainty, could spur a general increase in prices for an import-dependent economy which is struggling to rein in inflation at below 10 per cent.

Africa’s top energy producer issues bonds on a monthly basis as part of measures to finance its budget deficit, curb inflation and control money supply.

Nigeria’s Senate on Wednesday passed a N4.97tn 2011 budget weeks ahead of elections, increasing the spending plans from President Goodluck Jonathan’s initial proposal three months ago.

Inflation in sub-Saharan Africa’s second-biggest economy, declined to 11.1 per cent year-on-year in February from 12.1 per cent the previous month.

Source: Punch