Dipo Olowookere
By Dipo Olowookere
Bonds worth N450 billion to N540 billion would be issued for sale by the Debt Management Office (DMO) in the second quarter of 2021.
The Nigerian debt office announced this development in a circular released on Wednesday, where it stated the amount to be borrowed by the federal government between April and June 2021.
Funds raised from the bond sale are expected to be used to finance the deficit in the 2021 appropriation act signed by President Muhammadu Buhari last December.
Business Post reports that in the 2021 budget of N13.6 trillion, the sum of N5.2 trillion is the deficit to be sourced from local and external borrowing, with N2.1 trillion from the domestic debt market.
In the circular issued yesterday, the DMO said it intends to borrow the amount from the sale of the debt instruments in three maturities; 10 years, 15 years and 25 years; all reopening (meaning the tenors would continue from the already issued notes).
As a result, the 10-year paper would carry a maturity of nearly 6 years, the 15-year paper will have a tenor of almost 14 years, while the 25-year bond will carry a maturity of just over 24 years.
In the first month of Q2 2021, the debt office plans to get between N150 billion and N180 billion from investors, same with the second month as well as the third month.
DMO bond sale analysis
Giving a breakdown of the proposed sale, it said on April 21, it would auction to investors between N50 billion and N60 billion worth of the 10-year note, another N50 billion and N60 billion worth of the 15-year paper and N50 billion and N60 billion worth of the 25-year instrument.
On May 19, the disclosure noted that the DMO will approach the market with N50 billion and N60 billion worth of the 10-year paper, N50 billion and N60 billion worth of the 15-year note and N50 billion and N60 billion worth of the 25-year paper.
For the last bond sale for the quarter under review, the debt office said on June 20, it would auction N50 billion and N60 billion of the 10-year instrument, another N50 billion and N60 billion of the 15-year paper and N50 billion and N60 billion worth of the 25-year note.
