Bloomberg News

Naira Snaps 2-Day Retreat as Barclays Set to Add Nigeria Bonds

November 06, 2012

Nigeria’s naira snapped two days of declines against the dollar as Barclays Plc said it will add the nation’s debt to its emerging-market local-currency government bond index from March 2013.

The currency of Africa’s biggest oil producer gained 0.2 percent to 157.05 a dollar by 12:18 p.m. in Lagos, the commercial capital. The naira has increased 3.3 percent this year, the second-best performer in Africa, according to data compiled by Bloomberg.

Barclays follows JPMorgan Chase & Co., which added the West African nation’s bonds to its benchmark indexes last month. Barclays made the decision after reviewing changes in the market and polling investors on governance and market accessibility. The London-based bank’s EM Local-Currency Index includes securities from 20 eligible countries with a market value of $1.62 trillion.

“It is a very positive development and the Nigerian economy is getting more credibility,” Jide Solanke, an analyst at First Securities Discount House Ltd., said by phone from Lagos today. “Everybody knows they have strict criteria for the inclusion to any government bond index.”

Borrowing costs for Nigeria’s federal government dropped since JPMorgan’s announcement in August to add the bonds to its GBI-EM index series. The yield on the 16.39 percent naira debt due January 2022 fell 324 basis points to 12.89 percent since the start of August, according to yesterday’s prices compiled by the Lagos-based Financial Markets Dealers Association.

Eurobonds

The yield on the nation’s $500 million of Eurobonds due January 2021 was little changed at 4.45 percent today.

The central bank, led by Governor Lamido Sanusi, has left the benchmark interest rate unchanged at a record 12 percent this year, increased lenders’ reserve requirements and limited access to money auctions to stop dealers from buying foreign currency using naira purchased from the central bank at a discount.

The regulator, based in the capital Abuja, yesterday sold $29.88 million at the first of its regular twice-weekly foreign- currency auctions, the lowest amount in more than three years.

The naira strengthened 0.3 percent last week “partly due to lower corporate demand to pay for imports,” Ecobank Transnational Inc. strategists, led by Paul-Harry Aithnard in Paris, wrote in an e-mailed note to clients today.

Ghana’s cedi was little changed at 1.8806 a dollar in Accra, the capital.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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