DMO Increases Coupon Rates of 10-year, 20-year, 30-year Bonds

By Ashemiriogwa Emmanuel

The coupon rates of the three bonds offered for sale by the Debt Management Office (DMO) at the last primary market auction (PMA), Wednesday, October 20, 2021, was raised, Business Post reports.

High net-worth individuals (HNIs) and institutional investors who participated in the exercise got more than they might have bargained for as the debt office hopes to keep the demand for the investment tool high.

Before the bond sale, the DMO had said it planned to auction N150 billion worth of the papers in three maturities of 10 years, 20 years and 30 years, all re-opening, at N50 billion each.

However, investors showed significant interest in two of the notes, staking N49.05 billion on the 10-year paper, N80.92 billion on the 20-year note and N120.74 billion on the 30-year bond.

From the analysis of the bond sales, investors offered N250.71 billion on the N150 billion brought to the market, representing 67.14 per cent of over-subscription.

A further breakdown showed that the 12.98% FGN MAR 2050 note was oversubscribed by 141.5 per cent, the 16.2499% FGN APR 2037 paper was oversubscribed by 61.8 per cent and the 12.50% FGN JAN 2026 was under-subscribed by 1.9 per cent.

It was gathered that the debt office allotted N44.80 billion worth of the 10-year note to 36 successful bids at 11.65 per cent, higher than 11.60 per cent at the last exercise, which was a month ago. A total of 44 bids were received for this tenor with the range of bids between 10.50 per cent and 13.00 per cent.

As for the 20-year bond, it allotted N52.72 billion to 61 investors from the 96 offers it received and the coupon rate cleared at 12.95 per cent, higher than the 12.75 per cent of the preceding sale. The range of bids for this maturity was between 12.00 per cent and 14.00 per cent.

A look at the allotment for the 30-year paper showed that the DMO sold N95.24 billion to 54 investors from the 79 bids it received and this cleared at 13.20 per cent compared with the previous 13.00 per cent and the range of bids was from 12.70 per cent to 13.99 per cent.

It can be deduced that during the exercise, the debt office sold a total of N197.76 billion of the FGN bonds to investors, higher than the N150.00 billion it initially wanted to sell.