Savings Bond: DMO Raises N1.89bn In 8months

The Debt Management Office (DMO) has said it was able to raise N225.9 million through the 2- and 3-year Federal Government Savings Bond which it auctioned in August this year. The figure indicates a decline in interest in the short tenured bond targeted at retail bond buyers, as a N376.9 billion maturities is expected to boost liquidity this week. This brings the amount that the DMO had raised through the savings bond this year to N1.89 billion.

The debt office had last week opened the September auction of the savings bond, raising the two year bond at 11.364 per cent and the three year paper at 12.634 per cent. Last month, the two year paper had been auctioned at 10.668 per cent and had raised N49.32 million while the three year paper which raised N176.575 million had been auctioned at 11.668 per cent. This was lower when compared to N343.05 million that was raised through the two bonds in July. Average yields on the FGNSB had declined from 13 per cent last year to 11 per cent this year as the amount raised at each auction declined progressively.

At the debut auction held in March last year, the DMO had raised N2.06 billion through the two year bond but as at last month, the amount raised through the 2- and 3-year bond was N225.9 million. Investors’ interest in the FGN Savings Bond has been on the decline as the amount raised through the bond between January and June 2018 stood at N1.32 billion as against N4.75 billion that was raised between March and June 2017.

Meanwhile, traders say they expect an inflow of N376.9 billion through maturities of Treasury Bills and Open Market Operations. Treasury Bills and OMO maturities worth N136.3 billion and N240.6 billion respectively are expected to hit the system, further boosting liquidity levels which was at N349 billion last week Friday.

Analysts at Afrinvest West Africa noted that investors will remain cautious ahead of the Primary Market Auction (PMA) slated for Wednesday with a total offering of N136.3 billion across the 91, 182 and 364-day maturities.

“In addition, due to the high liquidity levels as well as expected inflows, we anticipate a more aggressive move by the CBN via OMO mop-ups. As a result, we advise investors to take advantage of OMO offers on the back of the higher stop rates at the last auction. Furthermore, we expect the secondary market T-Bills rate to adjust upwards in line with OMO and PMA stop rates.”