Nigeria to Auction N450bn Bonds Today, Introduces New 3-Year Tenor

March 18, 2024
liquid government bonds market

By Aduragbemi Omiyale

Sovereign bonds worth N450 billion will be auctioned at the primary market on Monday, March 18, 2024, by the Debt Management Office (DMO) on behalf of the Nigerian government.

The debt office is offering the paper for sale today in three tenors, with two re-opening and one being a new maturity, with each valued at N150 billion.

Details of the proposed exercise showed that the DMO is selling N150 billion worth of the new three-year note, N150 billion worth of the re-opening seven-year paper, and N150 billion worth of the 10-year re-opening instrument.

The debt office explained in a circular that for the re-openings of the previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.

It also stated that intending investors are required to pay N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 after that.

Analysts are already projecting a raise in the coupon rate today based on the outcome of the previous bond sales despite a slice in the stop rate of treasury bills at the primary market auction last Wednesday.

“In the upcoming auction, we anticipate an uptrend in rates across the offered instruments.

“We expect the recent upward adjustment (400bps) in the Monetary Policy Rate (MPR) by the Central Bank further to spur investors’ demand for a higher rate at the auction.

“Additionally, the results of the treasury bills primary market auctions during the month underscores investors’ appetite for higher returns.

“Moreover, the central bank’s commitment to liquidity management and its efforts to maintain appealing rates on government securities, particularly to attract foreign investors, along with the government’s preference for domestic borrowing to address fiscal deficits, suggest a strong rationale for a possible uptick in interest rates,” a part of a research note from Meristem Securities said.

Aduragbemi Omiyale

Aduragbemi Omiyale is a journalist with Business Post Nigeria, who has passion for news writing. In her leisure time, she loves to read.

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