Recent data from the Debt Management Office (DMO) shows a lowering trend in domestic costs of borrowing by the Nigerian government.
The percentage paid on securities have reduced by estimates of 650 base points for treasury bills, with 364 day maturity and 250 base points or 2.5% for bonds issued on July 21st 2017.
This drop in yields on government’s debt instruments has occurred within a six-month period.
The drop is catalysed by the government’s efforts to restructure its debts.
As at last year, Nigeria’s domestic debts- which have double digit yields, made up 78% of the country’s debt profile based on 2017 analysis. Foreign debts, which go as high as 7.5%, constituted just 22%.
The plan is to increase foreign debt to 40% and domestic debt to 60%.
Before the issuance of the November tranche of Euro bonds, Minister of Finance, Kemi Adeosun, said the country will save-up N168 billion from the November and February offer of the foreign security.
At this week’s monthly sale of Federal Government bonds, the DMO placed N80bn for auction; it received bids of up to N143bn and raised N64bn (US$210m).
In Q1 N254 billion was raised from bonds compared with N430 billion in the same quarter last year.
These savings of 176 billion are substantial; it could boost the government’s capital expenditure.