In its last monthly auction of FGN bonds, the Debt Management Office (DMO) raised a total of 243.8 billion – almost double of the 135.0 billion it offered, with a bid-to-cover ratio of 2.9x. 
Demand was driven by over-subscription of the 2027 and 2037 tenors (2.6x and 4.3x respectively) given that the coupon rates on those offerings printed above market rates of sub 16 percent. Additionally, stop rates were roughly c.100 bps lower across the curve, compared to the August auction.
On the one hand, the DMO has now reached its 1.25 billion domestic financing target for the 2017 budget deficit, which should improve its bargaining power at the remaining auctions in 2017.
On the one hand, the DMO has now reached its 1.25 billion domestic financing target for the 2017 budget deficit, which should improve its bargaining power at the remaining auctions in 2017.
On the other hand, it appears that investors are plying into the debt market to lock in higher returns, and the FGN would obviously take advantage of this burgling demand to reduce issuance costs.
Following the launch of Nigeria's debut 100 billion naira sovereign Sukuk, the authorities are planning to issue about $5.5 billion Eurobonds by year-end ($2.5 billion is expected to fund the budget and $3 billion to replace naira-denominated debts).
Following the launch of Nigeria's debut 100 billion naira sovereign Sukuk, the authorities are planning to issue about $5.5 billion Eurobonds by year-end ($2.5 billion is expected to fund the budget and $3 billion to replace naira-denominated debts).
This should further shrink the cost of debt, given the c.10 percentage-point spread between domestic and foreign borrowing costs.
Putting all these together, the market is expected to see a softer yield environment going forward.
Putting all these together, the market is expected to see a softer yield environment going forward.
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