Nigeria issued 25 billion naira in 1-year treasury bonds at par carrying an 8.96 percent yield, the central bank said on Monday. The bank said the auction on Thursday attracted 57.84 billion naira bids from investors, which was 131 percent more than its initial offer of 25 billion naira which it stuck to. Nigeria, Africa's top oil producer, had sold a similar amount of treasury bonds on December 6 at 7.93 percent, indicating a 103 basis points increase in yield at Thursday's auction.

Nigeria, sub-Saharan Africa's second largest economy, regularly auctions treasury bills and bonds to mop-up idle funds from the system to control money supply and curb inflation. Nigeria's inflation rose by 5.2 percent in November while broad money supply (M2) grew by 21.3 percent on annualised basis in the nine months to September versus a 29 percent target for the whole of 2007. Short-term interest rates have gone up to 10.75 percent on average since the central bank embarked on an aggressive cash mop-up through the sale of treasury bills and bonds late last year.