By Adedapo Adesanya
The Federal Government of Nigeria, through the Debt Management Office (DMO), may offer for subscription 40 to 50-year bonds in the near future.
Director General of the DMO, Ms Patience Oniha, hinted recently that the Nigerian government may consider issuing the debt instrument longer than the present tenor available at the nation’s debt market.
In April 2019, the DMO introduced the 30-year bond tenor and when it was auctioned, it received subscriptions worth 400 percent. Of the N20 billion offered for sale to investors, the debt office got N80.41 billion.
Speaking on a Channels TV show in June 2019, which was monitored by Business Post, the debt office chief, when asked by the presenter of Business Morning, Mr Boason Omofaye, if investors should be expecting bonds having maturities longer than the 30-year, said this cannot be ruled out in anyway.
“Let me say we work with the stakeholders to determine what tenor is suitable for them,” she responded.
“The longest tenure we had before [now] was 20 years. We introduced the 30-year [bond] because clearly, there was a need for it. There were operators in the market who needed long term instruments to match their liabilities, like the insurance companies, particularly those in life annuity business.
“So, if there is a need from stakeholders to introduce longer tenors, we would do that because our strategy is to meet investors’ demands and once the objectives align, we are good to go,” she added.
Earlier this year, it was reported by Financial Times that Nigeria’s neighbour, Ghana, was planning to follow the footstep of Italy, France, Belgium, and Spain to become the first African country to issue a 50-year bond to investors.
Also this year, Israel joined the exclusive financial club issuing a bond series that will be redeemable in 50 years, when it sold the debt instrument worth €500 million to investors.
Going by the past three issuance of the 30-year bond by Nigeria since its debut in April 2019, investors have huge appetite for the long-tenored debt instrument.
The debt office has used 13 primary dealer market makers (PDMMs) to sell the bonds to investors. These are Access Bank Plc, First Bank of Nigeria Ltd, Standard Chartered Bank Nigeria Ltd, Citibank Nigeria Ltd, FBNQuest Merchant Bank, and Stanbic IBTC Bank Plc.
Others include United Bank for Africa Plc, First City Monument Bank Plc, Coronation Merchant Bank Ltd, FSDH Merchant Bank Ltd, Zenith Bank Plc, Ecobank Nigeria Ltd, and Guaranty Bank Trust Plc.
