June 27 (Bloomberg) -- Nigeria’s Debt Management Office expects the country’s borrowing costs to fall after the central bank lifts a requirement for foreigners to hold local bonds for at least a year, Director General Abraham Nwankwo said.
“The measure has removed residual restrictions on entry and exit of non-resident investments in Nigerian securities,” Nwankwo said in a phone interview yesterday from Abuja, the capital. “All things being equal, the new rule would moderate yield downwards,” he said, without providing estimates.
The control will be eliminated on July 1, Central Bank of Nigeria Governor Lamido Sanusi said on June 23. Africa’s most populous nation had 4.87 trillion naira ($31 billion) of outstanding domestic debt as of March 2011, according to the Debt Management Office.
Bonds rose following Sanusi’s announcement, data compiled by the Financial Market Dealers Association showed. The yield on the 9.45 percent debt due January 2013 retreated 48 basis points, or 0.48 percentage point, to 9.87 percent on June 24.
Nigeria, Africa’s biggest oil producer, plans to sell 852 billion naira of bonds this year, excluding excludes the sale of bills maturing in less than a year, Nwankwo said. The West African nation estimates borrowing of 865 billion naira to fund its budget deficit for the fiscal year, which runs through December, 38 percent less than in 2010, the finance ministry said on Jan. 5.
Lawmakers approved an amended 2011 budget of 4.5 trillion naira on May 25, which slashes almost 500 billion naira off the spending plans passed two months earlier.
--With assistance from Dulue Mbachu in Lagos. Editors: Ana Monteiro, Peter Branton
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