The Central Bank of Nigeria (CBN) has asked banks to bid in a special currency auction to clear a backlog of dollar obligations that businesses owe, traders said on Wednesday.

The central bank asked commercial lenders to submit backlog dollar demand from fuel importers, airlines, raw-materials producers, and makers of agricultural chemicals and machinery for manufacturers.

In a notice to commercial lenders, the central bank said it would hold a retail foreign exchange auction on Wednesday to sell two- to five-month dollar forwards. The amount of dollars to be sold was unspecified, Reuters said.

Last December, the central bank sold around $1 billion on the forward market to clear a similar backlog of dollar obligations, in an effort to support production in Africa’s biggest economy.

Meanwhile, investors are lining up to buy dollar bonds Nigeria is expected to issue soon despite the country’s first recession in a quarter of a century, a currency crisis and budget shortfalls driven by low oil prices.

On the face of it, the $1 billion of bonds Nigeria hopes to sell by the end of March might seem unattractive, especially at a time sentiment towards African debt has soured after Mozambique missed a coupon payment.

But a Reuters report yesterday indicated that investors hungry for higher returns in a low interest rate environment reckon Nigeria’s benign debt levels, recovering foreign exchange reserves and a potential yield above seven per cent are reasons enough to look beyond the country’s economic woes.

“Nigeria’s starting position is one of low debt so if they price it attractively they will be able to get it done,” said Claudia Calich, who manages an emerging market bond fund at M&G Investments.

Nigeria’s Eurobond has been a long time coming. A year ago, Nigeria appeared to have shelved the idea in favour of a loan from China, but it embarked on an investor roadshow for the bond late last year in the United States and Britain.

Nigeria is Africa’s biggest economy, a member of the Organisation of the Petroleum Exporting Countries and vies with Angola for the position of top oil producer, but that also means it is very exposed to fluctuations in the oil market.

The last time Nigeria issued dollar-denominated bonds in July 2013, oil was comfortably above $100 a barrel but the slump in prices from $115 in June 2014 to just $28 a barrel by January 2016 has hurt the West African country’s economy.

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