DMO auctions N150 billion bonds on behalf of the Nigerian Federal Government

The Debt Management Office (DMO) on Wednesday announced the auction of N150 billion in bonds for April, on behalf of the Federal Government.

A 10-year reopening bond will be offered at 16.2884% with maturity date slated for March 2027, according to a breakdown by Nairametrics. A 15-year reopening bond will be offered at 12.5% to mature in March 2035, and a 25-year reopening bond will be offered at 9.8% with a maturity date in July 2045.

“For re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned plus any accrued interest rate on the instrument,” the DMO wrote on its website.

The announcement can be found in a release issued by the office on April 14, 2021, and is available on the website.

According to the release, bonds that would be auctioned on April 21 will have a settlement date of April 23, 2021. It added that the unit sale is N1,000 per unit, and is subject to a minimum subscription of N50,000 and in multiples of N,1000 afterward. Also, interest is payable semi-annually with an expectation of the redemption to be in bullet payment by maturity date.

The office earlier said that the auctioned FG’s bonds for March worth N150 million were oversubscribed by N183.48 billion. Investor’s total subscription for the bonds was N333.4 billion, which comprised of N65.25 billion for 16.2884% FGN March 2027 bonds, N110.19 billion for 12.5% FGN March 2035 bonds, and N158.04 billion for 9.8% FGN July 2045 bonds. A total of N262.1 billion was allotted which comprised of N44.01 billion, N86.29 billion, and N142.80 billion, respectively.

The DMO disclosed that the bonds qualify as securities with which trustees can invest under the Trustee Investment Act. “It also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds and other investors.” Adding that it is also listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.

All federal government bonds qualify as liquid assets for the calculation of liquidity ratio for banks, the DMO said. It assured investors that the bonds were backed by the federal government and charged upon the general assets of Nigeria.