N115 Billion FG Bonds For Auction

The Debt Management Office has said the Federal Government will auction by subscription N115bn worth of bonds on November 21.

In a circular by the DMO on its website on Tuesday, the breakdown of the figure revealed that N35bn five-year reopening bond to mature in April 2023 would be offered at 12.75 per cent; another N35bn seven-year reopening bond to mature in March 2025 would be auctioned at 13.53 per cent; while N45bn 10-year bonds to mature in February 2028, would be auctioned at 13.98 per cent.

The DMO said, “The units of sale would be N1, 000 per unit subject to a minimum subscription of N50, 001,000 and in multiples of N1, 000 thereafter.”

On the interest rate, it stated, “For re-opening of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.

On the securities, it added that the FGN bonds were backed by the full faith and credit of the Federal Government of Nigeria and were charged upon the general assets of Nigeria.

The DMO had earlier, in a press release, said that the FGN bond auctions which were conducted by the DMO on September 26, 2018, and the August 2018 auction were oversubscribed.

“Total subscriptions received from bidders for three bonds offered: five-year, seven-year and 10-year were in excess of N158bn, against the N90bn offered. Demand at the auction was concentrated on the 10-year bond which was 313 per cent subscribed.

“Allotments were made to successful bidders at 15.00 per cent for the five-year, 15.15  per cent for the seven-year and 15.2459 per cent for the 10-year bond, which are consistent with the rates in the secondary market for the bonds offered at the auction.”

The DMO added that a total of N96.74bn was allotted to bidders at the auction and the proceeds would provide additional financing for the implementation of the 2018 Appropriation Act.

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