Nigeria Borrows N274.5bn from Local Investors at Over 13%

By Dipo Olowookere

The local debt market was busy on Wednesday, April 21, 2021, as the federal government asked for some funds from investors in the space.

The Debt Management Office (DMO) conducted the first sale of the FGN bonds in the second quarter of the year and the debt securities worth N150 billion worth brought to the market.

Investors were prepared for the exercise, especially now that the yield environment in the fixed income market is getting encouraging again.

According to details of the transactions, the debt office auctioned N50 billion worth of the 10-year paper, another N50 billion worth of the 15-year paper and N50 billion worth of the 25-year paper.

Business Post observed that the 10-year instrument maturing in the next five years recorded a low subscription level, 69.4 per cent, as it received N34.7 billion worth of subscriptions in 50 bids.

However, the 15-year note, which matures in almost 14 years’ time, was slightly oversubscribed as it had a subscription level of 112.2 per cent, with N56.1 billion staked on it in 75 bids.

The 25-year paper maturing in 24 years’ time was largely oversubscribed by investors with a subscription level of 349.8 per cent as N174.9 billion was staked on the tenor in 184 bids.

This indicated that for the N150 billion worth of the FGN bonds auctioned by the agency yesterday, investors offered N265.7 billion.

For the allotment, the DMO sold N23.0 billion worth of the 10-year bond and N42.5 billion for non-competitive bids, totalling N65.5 billion at 12.25 per cent.

Also, N38.8 billion worth of the 15-year note was allotted for competitive bids and N74.0 billion for non-competitive bids, totalling N112.8 billion at 13.34 per cent, while N96.2 billion was allotted for the 25-year instrument at 13.85 per cent.

At the close of the exercise, the debt office sold N274.5 billion worth of bonds to investors at an average coupon rate of 13.15 per cent for both competitive and non-competitive bids.

The amount borrowed by the federal government yesterday from the domestic debt market through the DMO has increased the total debt stock of the nation.