Investors Stake N626bn on N155bn FGN Bonds, Rates Drop

FGN Bond prices

By Dipo Olowookere

Yesterday, the Debt Management Office (DMO) conducted the first FGN bond sale for 2020 and the exercise, as expected, was oversubscribed by investors.

Results from the bond auction showed that subscriptions worth N626.3 billion were received for the papers valued at N155 billion offered for sale by the Nigerian government via the DMO.

The debt office sold the notes across three different maturities; 5-year, 10-year and 30-year tenors), with mid and long-dated instruments getting more attention than the short-dated paper.

According to the DMO, it approached the local debt market with N50 billion worth of 5-year bond, another N50 billion worth of the 10-year bond and N55 billion worth of the 30-year bond.

However, results showed that the notes were oversubscribed by more than 300 percent through competitive bids of N624.5 billion and N1.83 billion through non-competitive bid.

It was observed that investor appetite for the 30-year bond continued to be strong, with subscription of N341.77 billion or 621 percent compared with the amount offered, N55 billion, while subscription for the 10-year Bond was N201.98 billion or 404 percent when compared with the amount offered, N50 billion.

It was disclosed that successful bids were allotted at the rate of 9.85 percent for the 5-year, 11.13 percent for the 10-year and 12.56 percent for the 30-year bonds, which indicate a significant decline from the rates of 11.00 percent, 12.00 percent and 13.00 percent for the 5-year, 10-year and 30-year bonds, respectively, at the December 2019 FGN bond auction.

The total amount allotted for competitive bids was N410.0 billion across the three tenors. In addition, the sum of N1.83 billion was allotted through non-competitive bid for the 30-year bond at same rate with the competitive bids.

Overall, the sum of N411.8 billion was allotted to investors at the auction through both competitive and non-competitive bids.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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