PFAs, Others Get 30-Year, 25-Year FGN Bonds Above 9%

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By Dipo Olowookere

On Wednesday, August 19, 2020, the Debt Management Office (DMO) auctioned some Federal Government of Nigeria (FGN) bonds to investors at the local debt market.

Business Post reports that the debt office approached the market with the government debt securities valued at N150 billion spread across four different maturities, receiving bids worth N242.3 billion.

Details of the exercise released by the DMO showed that N25 billion worth of the reopening 10-year 12.50% FGN JAN 2026 bond, N40 billion worth of the reopening 15-year 12.50% FGN MAR 2035 bond, N45 billion worth of the reopening 25-year 9.80% FGN JUL 2045 bond and N40 billion worth of the reopening 30-year 12.98% FGN MAR 2050 bond were offered for sale.

When the subscriptions were analysed, it was observed that investors, who were primarily institutional, especially the Pension Fund Administrators (PFAs), insurance companies and others, were more interested in the 30-year instrument.

From the summary of the auction released by the debt office on Wednesday, the tenor received 100 bids, the highest of all the four maturities offered for sale by the government agency and it received subscriptions worth N114.3 billion for the N40 billion auctioned.

The 25-year bond got 46 bids valued at N46.4 billion for the N45 billion offered for sale, the 15-year tenor had 71 bids worth N48.8 billion for the N40 billion the DMO auctioned, while the 10-year bond received 45 bids worth N32.7 billion for the N25 billion auctioned.

After the bids from subscribers were analysed, the debt office allotted N25.4 billion worth of the 10-year bond and made a non-competitive allotment of N8.0 billion for the same tenor.

Also, the DMO said it allotted N21.5 billion worth of the 15-year maturity to investors and a non-competitive allotment of N1.5 billion for the same bond.

For the 25-year instrument, the debt office said it allotted N16.1 billion with no non-competitive bid and allotted N53.7 billion for the 30-year tenor which also did not have a non-competitive allotment.

According the agency, the 10-year instrument, which now has a tenor of 5 years and 5 months, was sold at 6.70 per cent.

The 15-year bond, which is maturing in 14 years and 7 months’ time, was sold at 9.35 per cent, while the 25-year instrument was sold at 9.75 per cent, with the 30-year bond going for 9.90 per cent.

The next exercise is slated for next month and from all indications, it will receive the same level of subscription from investors, who are looking financial tools to tie their funds to.

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