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Nigerian Eurobond Yields Fall as Bank Says No Threat to Reserves

Dec. 6 (Bloomberg) -- Nigeria’s Eurobond yields fell for the seventh day to a record after central bank Governor Lamido Sanusi said the nation’s financial system is not under threat from the withdrawal of speculative investments.

Borrowing costs on the $500 million dollar debt due January 2021 slid four basis points, or 0.04 percentage point, to 4.162 percent at 1:18 p.m. in Lagos, the lowest since it was issued in January 2011, according to data compiled by Bloomberg. The yields have dropped 213 basis points from a high of 6.29 percent on Dec. 21, 2011.

Africa’s biggest oil producer would still have $36 billion in reserves if speculative investments of about $10 billion left the country, Sanusi said at a conference yesterday. The nation’s foreign-exchange reserves have increased 35 percent this year to $44.5 billion as at Nov. 30, according to data on the Central Bank of Nigeria’s website.

“Strong external reserves boost the confidence of offshore investors in the nation’s debt,” Sewa Wusu, analyst at Lagos-based Sterling Capital Ltd., said by phone.

The central bank has left its benchmark interest rate unchanged at a record 12 percent this year, increased lenders’ reserve requirements and limited access to money auctions to stop dealers from buying foreign currency using naira purchased from the bank at a discount.

The naira weakened less than 0.1 percent at 157.18 a dollar on the interbank market in Lagos. The currency has strengthened 3.2 percent this year, the second-best performer in Africa, according to data compiled by Bloomberg.

The yield on 16.39 percent naira debt due January 2022 fell eight basis points to 12.10 percent, according to yesterday’s prices on the website of the Lagos-based Financial Markets Dealers Association website.

Ghana’s cedi was unchanged at 1.8913 a dollar in Accra, the capital, today.

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

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

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