DMO Sells 25-Year Bond for 11.80%, 15-Year Tenor for 11.25%

By Dipo Olowookere

The monthly sovereign bond sale in Nigeria was conducted on Wednesday for the month of February 2021 by the Debt Management Office (DMO).

The exercise, as usual, was largely successful as investors are beginning to return to the fixed income market following the recent uptick in the yields of securities in the space.

According to the details of the bond sale, the debt office went to the local market with the debt instruments worth N150 billion spread equally across three tenors.

In the analysis of the transactions obtained by Business Post, the DMO auctioned N50 billion worth of 10-year bond, N50 billion worth of 15-year bond and N50 billion worth of the 25-year bond.

As expected, the offers received huge subscriptions across the different categories of investors; retail and institutional and from the analysis of the exercise, as released by the debt office, a total of 78 bids worth N77.1 billion were received for the 10-year paper with an actual maturity of 6 years and one month.

Also, the DMO received 53 bids valued at N72.3 billion for the 15-year note with an actual tenor of 14 years and one month, while 60 bids worth N40.1 billion were received for the 25-year instrument with an actual maturity of 24 years and 5 months. This indicated a total subscription of N189.5 billion.

However, only 31 bids were successful for the 10-year bond, 20 for the 15-year bond and 30 for the 10-year bond, with N33.6 billion allotted for the 16.2884% FGN MAR 2027 paper, N28.9 billion allotted for the 12.50% FGN MAR 2035 paper and N18.0 billion allotted for the 9.80% FGN JUL 2045 paper.

Also, the debt office made allocations for non-competitive subscriptions and from the analysis, most of the sales went there as N52.0 billion was for the 10-year bond and N70 billion for the 15-year bond. The 25-year bond had no non-competitive sale.

According to the DMO, some investors submitted bids for the notes at interest rates as high as 15 per cent, especially for the 25-year instrument and there were bids for as low as 8.1 per cent.

However, when the exercise was completed, the agency sold the 10-year maturity for 10.25 per cent, the 15-year maturity for 11.25 per cent and the 25-year maturity for 11.80 per cent.

Business Post reports that the settlement date for all the three levels of the bond is Friday, February 19, 2021.