DMO to Sell N225bn FGN Bonds Today at Primary Market

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By Dipo Olowookere

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

According to a circular released by the agency, all the three maturities are re-opening, meaning they are from the previously sold bonds.

Business Post reports that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction, another N75 billion worth of a 10-year note maturing in 2032 is up for grab and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Based on recent happenings, especially with inflation nearing 18 per cent and the benchmark interest rate pushed to 13 per cent by the Central Bank of Nigeria (CBN), the debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment on the maturity date.

Today’s PMA is expected to witness a significant increase in subscriptions and the debt office is anticipated to make it attractive because it would want more investors to be interested in the instrument, especially at a time the national government failed to sell its Eurobond to international investors due to pricing.

Like it did in 2020 when it cancelled its Eurobond sale due to the COVID-19 pandemic, the suspended $950 million Eurobond would be diverted to domestic investors and this should result in a hike in the coupon rate, which subscribers will welcome with both hands.

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