On Tuesday the central bank cut its benchmark interest rate for the first time in four years by 50 basis points to 13.5 percent to try to stimulate growth.
Though investors were willing to buy 241.07 billion naira worth of debt at the auction, the debt office was unwilling to pay more and therefore reduce its interest rate cut off point at 13.5 percent.
The government had paid an average of 14.74 percent for each of the tenor paper at the last month's auction.
The debt office sold only 3.80 billion naira in the 5-year tenor at 13.50 percent, 5.55 billion naira worth in the 7-year paper at 13.50 percent and 20 billion naira of the 10-year debt at 13.50 percent marginal rate at the main auction.
A total of 92.60 billion naira was, however, allocated to Non-competitive bids conducted outside the auction. Government institutions such as the central bank and other agencies usually buy bonds outside the regular auction and their bids are considered as non-competitive bids.
The 5-year, 7-year and 10-year bonds were sold at 14.52 percent, 14.79 percent and 14.93 percent at the February auction.
Analysts attributed the lower yields on the debt note sold at Wednesday's auction to the fall out from the reduction in MPR by the central bank.
Nigeria finance minister said the country will borrow 50 percent of this year's budget deficit from the domestic debt market as it looks to slash debt service going forward.
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