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Nigeria’s Dollar Bonds Trend Lower After FX Reserve Revelations
August 15, 2023
As per long-delayed financial statements published by the Central Bank of Nigeria (CBN), the African sovereign’s effective forex reserves are lower than previously disclosed. Bloomberg noted that the annual statements, published for the first time since 2015, reveal previously undisclosed transactions of $7.5bn with JP Morgan and Goldman Sachs. They added that the CBN also vastly exceeded its limits on lending to the government. Based on actual government revenues of NGN 5.05tn ($6.5bn) in 2021, the cap on lending should be 5% of revenues or NGN 252bn ($329mn); CBN instead lent NGN 23.18tn ($30.3bn) to the government as at the end of 2022. The central bank admitted to the breach, stating that the amount lent “exceeded the statutory limit by 22.9 trillion naira”.
Nigeria’s dollar bonds trended 1-2 points lower on Tuesday with its 6.125% 2028s trading 1.65 points lower to 81.96 to yield 10.8%.
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