Nigeria to Sell Inflation-Linked Bonds Within 4 Years, DMO Says

Nigeria plans to sell inflation-linked bonds to address the concern of investors about the impact of inflation on the domestic debt market, the Debt Management Office said.

“The inflation-linked bond is part of our 2013 to 2017 strategic plan,” Abraham Nwankwo, director general of the agency known as DMO, told reporters today in the southeastern city of Enugu. Part of the plan may be implemented this year “where it is possible,” he said.

Africa’s top oil producer is also planning to sell 80 billion naira ($505 million) in federal government bonds “in the form of global depository receipts” and will introduce “bond switches and securities lending” to deepen the market, Nwankwo said.

Nigeria’s inflation rate accelerated to 9.1 percent in April from 8.6 percent in the previous month, according to the National Bureau of Statistics. The central bank has held the benchmark interest rate at a record 12 percent since October 2011 to check inflation and support the country’s currency against the dollar.

The yield on the country’s 16.39 percent domestic bonds due January 2022 rose 45 basis points to 12. 29 percent in the secondary market today, according data compiled on the Financial Markets Dealers Association website. The yield on the 7 percent domestic bonds due October 2019 rose 11 basis points to 11.80 percent, it showed.

All debt sold will be for specific infrastructure projects and will not exceed the target ratio of 25 percent of gross domestic product, Nwankwo said.

To contact the reporter on this story: Emele Onu in Lagos eonu1@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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