Business Post Contributor
By Ashemiriogwa Emmanuel
The N150 billion worth of Federal Government of Nigeria (FGN) bonds auctioned to investors for August on Wednesday recorded N360 billion worth of subscriptions, details of the exercise analysed by Business Post showed.
The papers were on Wednesday, August 18, offered by the Debt Management Office (DMO) for sale at the local debt market in three maturities of 10 years, 20 years, and 30 years at N50 billion each, all re-opening.
The result of the sale of the FGN bonds released by the debt office indicated that the papers were oversubscribed by investors by 140 per cent.
During the session, the 10-year bond recorded 83 total bids with rates ranging from 10.5 per cent – 13.0 per cent and the total subscriptions at N77.7 billion.
However, the DMO only sold to 54 investors and allotted to them N64.3 billion worth of the 10-year notes at a coupon rate of 11.6 per cent.
As for the 20-year paper, the agency sold N91.03 billion to 126 successful bidders from a pool of 138 subscribers with a range of bids from 11.00 per cent to 13.65 per cent and offers worth N105.0 billion. But the DMO cleared the paper at 12.75 per cent.
For the 30-year bond, the debt office said it received bids valued at N177.4 billion from 186 investors at a range of bids from 11.99 per cent to 14.00 per cent.
However, it allotted N104.8 billion worth of the note to 125 bidders at 12.8 per cent.
Those who subscribed to these FGN bonds are paid their interest two times a year and they will be reimbursed their initial amount invested in the debt securities at the maturity date.
The maturity date for the 10-year, 20-year, and 30-year bonds are February 23, 2028, March 18, 2036, and March 27, 2050, respectively.
The FGN bonds are issued to meet the specific needs of the federal government and have the obligation to pay bondholders the principal interest rate as at when due.
It is backed by the full faith and credit of the Federal Government of Nigeria and is charged upon the general assets of Nigeria.
This exercise is conducted monthly and at the third Wednesday of the month.
