By Babajide Komolafe

FEDERAL Government bonds auction recorded 41 percent patronage this week following investors’ demand for higher yield.

President Muhammadu Buhari and Vice President Yemi Osinbajo at the opening of a 2-day National Economic Council Retreat at the Statehouse Conference Centre on 21st March 2016.

Results of the auction show that investors demanded for interest rates as high as 18 percent, about 2.0 percent higher than what the DMO offered.

Results of the bond auction conducted by Debt Management Office (DMO) on behalf of the federal government revealed that investors demanded for 65 percent or N61.7 billion of the N95 billion bonds offered while only 41 percent or N39 billion was sold by the agency.

The DMO offered N35 billion of bonds maturing in 2021, with investors demand at N16.46 billion, while N5 billion was sold at 15.5. The agency offered N25 billion of bonds maturing in 2026, with investors demand at N17.51 billion, while N17.51 billion was sold at 15.98 percent.  The agency also offered N35 billion bonds maturing in 2036, with investors demand at N27.7 billion while N20 billion was sold at 15.9 percent.

The demand for higher yields might not be unconnected to the persistent rise in inflation. According to the National Bureau of Statistics (NBS), inflation rose to 18.3 percent from 17.9 percent in September, representing 11 consecutive monthly increase of the inflation rate.

Meanwhile, the Central Bank of Nigeria (CBN) sold N119.92 billion worth of short term    treasury bills at an auction on Wednesday, with mixed yields. The bank sold a total of N32.43 billion of the 3-month paper at 13.99 percent, broadly unchanged from 14 percent at the last auction on Nov. 2.

It sold N22.82 billion of 6-month debt at 17.40 percent, down from 17.50 percent at the previous auction, while a total of N64.67 billion of 1-year bills was sold at 18.70 percent, compared with 18.30 0 percent previously.

Total subscriptions rose to N158.07 billion compared with 122.96 billion naira at the last auction, the data showed.