FGN’s May N100bn Bonds Oversubscribed By N171bn

The Federal Government’s bond for the month of May worth N100bn, which was offered on Wednesday, was oversubscribed by over N171.11bn.

Recent trends in the FGN bonds also showed that investors had preference for long term bonds.

Total bids received from investors for the bond was N271.11bn.

The Debt Management Office disclosed that the trend of oversubscription at the FGN bond auctions for the year continued, after the three instruments for five, 10 and 30-year tenors, of N35, N35 and N30bn respectively.

At the May 2019 FGN bond auction on Wednesday, the DMO offered three instruments for five, 10 and 30-year tenors to the investing public, with a total amount offered of N100bn.

As with the April auction when the 30-year bond was first offered to the market, investors showed a stronger demand for the 30-year bond with subscription of over N100bn compared to the N30bn offered.

“This clearly indicates that the DMO understands the needs and preferences of investors in terms of tenor, which informed its introduction of the 30-year bond,” the DMO stated.

The five and 10-year instruments were equally oversubscribed, with subscription of N45.98bn and N124.22bn respectively, compared to the N35bn offered for each of the instruments.

The 30-year instrument at N30bn had N100.91bn subscription.

In addition to the strong demand, interest rates demanded by investors also significantly declined for all the instruments compared to the April 2019 auction.

Allotments were made to successful bidders at 14.11 per cent for the five-year, 14.24 per cent for the 10-year and 14.49 per cent for the 30-year bond.

The DMO allotted a total of N111.31 bn for the three instruments offered.