Nigerian T-Bill Yields Fall to 14-Month Low as Demand Climbs

Nigeria’s domestic borrowing costs dropped to the lowest level since March 2013 as a strengthening naira eased pressure on inflation and bolstered demand for the debt of Africa’s largest economy.

The Central Bank of Nigeria sold 157 billion naira ($973 million) of 91-, 182- and 364-day Treasury bills on May 7, with yields of all the notes retreating. Investors’ demand rose 20 percent from the previous auction on April 23, according to data compiled by Bloomberg.

“There’s renewed interest in government securities owing to an improvement in the naira exchange rate and the inflation outlook,” Kunle Ezun, a Lagos-based analyst at Ecobank Transnational Inc. (ETI), said by telephone.

The currency of Africa’s biggest oil producer has gained 0.8 percent against the dollar in the past month, rebounding after a fall to a record low in February. That’s easing pressure on inflation, which accelerated to 7.8 percent in March from 7.7 percent a month earlier. Foreign-exchange reserves dropped 13 percent this year as the central bank used the funds to prop up the naira at its twice-weekly currency auctions.

The bank sold 22 billion naira of 91-day notes at 10.24 percent, 30 billion naira of 182-day securities at 10.65 percent and 105 billion naira of 364-day debt at 11.28 percent, according to data compiled by Bloomberg. The currency weakened 0.4 percent to 161.55 per dollar by 2:29 p.m. in Lagos.

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

To contact the editors responsible for this story: Vernon Wessels at vwessels@bloomberg.net Emily Bowers, Zahra Hankir

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