FG raised N418bn from bond auctions in January –DMO

By Chinwendu Obienyi with agency report

The Debt Management Office has revealed that it raised about N418.197 billion from the four bonds that were auctioned last month.

This reflects an ongoing investor interest in longer tenured Nigerian bonds due to their higher yield rates.

The DMO disclosed this whilst releasing the FGN bond auction result for January 2024.

The auction, which took place on January 29, 2024, saw the reopening of the 10-year 16.2884 per cent FGN MAR 2027, the 10-year 14.55 per cent FGN APR 2029, the 10-year 14.70 per cent FGN JUN 2033, and the 15-year 15.45 per cent FGN JUN 2038 bonds.

For instance, N90 billion was offered for the 16.2884 per cent FGN MAR 2027 bond and a subscription of N166.997 billion, representing an oversubscription of N76.997 billion was received, with bids ranging between 12.00 per cent and 18.50 per cent. However, only N86.187 billion was allotted with the marginal rate being 15.00 per cent.

Similarly, N90 billion was offered for the 14.55 per cent FGN APR 2029 bond. A subscription of N56.839 billion was received, representing an under-subscription of N33.161 billion, with bids ranging between 12.50 per cent and 18.00 per cent. However, the total allotted amount was N21.939 billion with a marginal rate of 15.50 per cent.

N90 billion was offered for the 14.70 per cent FGN JUN 2033 bond. A subscription of N68.846 billion was recorded, representing an under-subscription of N21.154 billion, with bids ranging between 13.50 per cent and 17.97 per cent. The total allotted amount was N43.346 billion with a marginal rate of 16.00 per cent.

N90 billion was offered for the 15.45 per cent FGN JUN 2038 bond. A subscription of N311.875 billion was received, representing an oversubscription of N221.875 billion with bids ranging from 15.7 per cent and 18.5 per cent. The total allotted amount was N266.725 billion with the marginal rate being 16.50 per cent.

The auction results display continued investors’ appetite for longer-tenured bonds in Nigeria due to higher yield rates, even as Nigeria is yet to turn the corner concerning inflation.

With a drop in 2024’s budget deficit to N9.18 trillion from 2023’s budget deficit of N11.34 trillion, it is expected that there will be a drop in the amount raised through FGN bonds.

For example, the N418.197 billion allotted in FGN bonds in January 2024 is a 36.9 per cent year-on-year decline from the N662.617 billion raised in January 2023.