The DMO Raised N588.85 From the FGN Bond Offer in March 2024
- Posted on March 19, 2024
- Featured
- By PETER AGADA
The Debt Management Office (DMO) has announced that it has successfully raised N588.85 billion from the March 2024 Federal Government (FGN) Bond offer, which opened last week. The return was far more than the N450 billion it planned to raise.
The recent federal borrowing has increased Nigeria’s debt profile as the government continues to depend on debts to fund its operations.
According to the report, the March offer was much less than the N2.5 trillion it had set out to raise last month, and the N1.49 trillion it eventually raised in the February offer. The bond auction results released by the debt office showed that the longer-tenured bond had more interested investors.
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The DMO had planned to raise N150 billion through a new 3-year FGN MAR 2027 bond and N150 billion each from the re-issuance of the 18.50% FGN FEB 2031 7-year paper and 19.00% FGN FEB 2034 10-year paper.
According to the auction results, of the N298.6 billion subscription on the 19.00% FGN FEB 2034 10-year paper, the DMO had allotted N275.85 billion aside from a non-competitive allotment of N113.2 billion at a stop rate of 20.45% with bids ranging from 17.5 to 25%.
The DMO raised N151.928 billion from the new issue of a 3-year FGN MAR 2027 bond at a stop rate of 19.94%, with bids ranging from 17% to 25% It also raised N47.886 billion from the 18.50% FGN FEB 2031 7-year paper at a stop rate of 20%.
If you recall, in February, the debt office raised two new bonds, hoping to raise N1.25 trillion each from FGN FEB 2031 7-Year and FGN FEB 2034 10-Year bonds. However, it could only raise around half of its intended sale of N2.5 trillion in seven- and 10-year bonds as the low-interest rates on offer curbed investor appetite.
The two bonds were subscribed to the tune of N1.49 trillion, with the seven-year tenor bond raking in N873.5 billion, 69.6 percent of the amount offered, while the 10-year bond got N621.38 billion, 49.6 percent of the total offer.
However, the rates on the bond offers are less than the 22.75% benchmark interest rate and 29.9% inflation rate in the country.
Back Story
The Federal Government reported raising N1.5 trillion through bonds at its February auction instead of its earlier target of N2.5 trillion.
The Debt Management Office released this on Tuesday, stating that the 2031 bond had a total allotment of N873.53bn while that of the 2034 bond stood at N621.38bn.
The Federal Government proposed last week that it will borrow N2.5 trillion via bonds; this is said to be the second time the government is approaching the fixed-income market this year.
It stated that the offerings consisted of N1.25tn with a maturity date of February 2031 and N1.25tn with a 10-year tenure.
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