Central Bank of Nigeria to auction N100bn in bonds

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The Central Bank of Nigeria (CBN) is planning to auction N100bn in bonds with tenures ranging from three years to 20 years at the auction next Wednesday, according to the Debt Management Officer (DMO).

The DMO revealed that it would offer N15bn in three-year, N50bn in 10-year and N35bn in 20-year debt. All the bonds are re-openings of previous issues.

According to Reuters, the Chief Executive Officer of Stanbic IBTC, Sola David-Borha, confirmed that the bank is planning a Tier II capital raise during an analysts’ conference call on Thursday but said the actual amount would depend on market conditions and regulatory guidelines.

David-Borha said the mid-tier lender was aiming for a 15% loan growth for the second-half of 2014, targeting business customers, after it grew loans 18% in the first-half. The naira recently fell by 0.58% to a five-week low against the dollar on Thursday, on renewed dollar demand after a recent rally on the local currency.

The naira closed at N162.70 to the dolllar, a level last seen on July 2, and weaker than Wednesday’s close of N161.75. Traders said the month-end dollar sales from oil companies that provided support for the naira in the past three weeks had ceased so far.

According to one dealer, “We are expecting that the Nigerian National Petroleum Corporation will come into the market soon to sell dollars and this should help calm the market.” The NNPC supplies a substantial amount of the dollar flows in the country.

Traders are also expecting an inflow from offshore investors participating at a local debt auction next week. The naira had fallen by 0.43% against the dollar on the interbank market on Wednesday after importers brought forward their obligations to take advantage of a recent rally in the local currency.

The naira closed at N161.65 naira to the dollar, weaker than the N160.95 that it closed the previous day.

The naira had on Monday firmed to an almost three-month high against the greenback. Traders said the local unit of Eni sold $20m to some lenders on Wednesday, but it was not sufficient to support the naira.

Dealers anticipate a dollar sale by the NNPC any time soon to help to stem the slide in the local currency. Most of the energy companies operating in the country buy the local currency at the end of the month to fund domestic obligations.

The naira had closed unchanged against the dollar on the interbank market last Wednesday, after two days public holiday to mark the Muslim festival. Month-end dollar sales by some energy companies have continued to provide support for the local currency in the last two weeks, keeping it within the band of N161.50 to N162 against the dollar.

“We see the naira stable around the present band in the near term, with more dollars expected from some energy companies,” one dealer had said.