FG Raises N1.923trn Through Savings, FGN Bonds In Eight Months
In a development that shows sustained investors’ confidence in the Nigerian debt market, the federal government through the Debt Management Office (DMO) in raised a whooping N1.923 trillion from bond auctions from January till date.
The government raised the funds through the FGN bonds, mostly for high net worth institutional investors and saving bonds, primarily for retail investors, through the Debt Management Office.
Data collated from the Debt Management Office website showed that investors staked their highest bet in June with a total subscription of N417.48 billion on the 10, 20 and 30 year FGN bonds.
However, the Debt Management Office allotted N325.8 billion through the 16.2884 per cent 10-year bond, 12.50 per cent 20 year paper and 12.98 per cent 30 year paper. It had also raised N4.5 billion through non-competitive allotment.
Conversely, subscription dropped in July to N286.11 billion as investors bid at higher rates, while N138.07 billion had been allocated. Another N103.9 billion was also raised through the non-competitive allotment in July. In outgoing month of August, subscriptions rose to N414.07 billion out of which only N260.09 billion was allocated for the 13.98 per cent 10-year paper, 12.4 per cent 20-year paper and 12.98 per cent 30-year paper.
At the beginning of the year in January, the Debt Management Office had raised N170.34 billion from FGN bond auctions the lowest it raised at the monthly bond auctions while it raised another N202.55 billion in February. In March, 2021, the Debt Management Office raised another N262.1 billion and N274.45 billion in April while N175.24 billion was raised through the FGN bond auctions in May.
On the retail end, the highest savings bond was raised in February when investors staked N1.76 billion on the 2- and 3-year retail bond. It was followed by N961.99 million that was raised in July. The debt office was also able to raise N888.21 million through the savings bond in August.
Last week, trading in the Treasury bonds secondary market also closed on a bullish note, as investors sought to fill lost bids from previous bond auction.
Specifically, the average yield declined by 17 basis points to 11.4 per cent.
Across the benchmark curve, the average yield declined at the short (-5bps), mid (-41bps) and long (-7bps) ends following demand for the MAR-2024 (-39bps), MAR-2027 (-77bps) and MAR-2036 (-21bps) bonds, respectively.
At the bond auction, the DMO offered instruments worth N150.00 billion to investors through re-openings of the 13.9800 per cent FGN FEB 2028 (Bid-to-offer: 1.55x; Stop rate: 11.60%, previously: 12.35%), 12.4000% MAR 2036 (Bid-to-offer: 2.10x; Stop rate: 12.75%, previously: 13.15%) and 12.9800% FGN MAR 2050 (Bid-to-offer: 3.55x; Stop rate: 12.80%, previously: 13.25%) bonds.
As expected, demand was higher as subscription stood at N360.02 billion; bid-to-offer: 2.4x) than July’s auction where subscription was N286.11 billion; Bid-to-offer: 1.9x) of which the DMO eventually over-allotted instruments worth N260.09billion, resulting in a bid-to-cover ratio of 1.4x.
Commenting, analysts say they expects lower yields in the days ahead given expectations of limited supply and deliberate efforts by the DMO to reduce domestic borrowing costs for the government.
Speaking on the Treasury Bills Market, the analysts said they expect quiet trading as the Central Bank of Nigeria (CBN) is set to roll over N157.20 billion worth of maturities to market participants at its bi-weekly Primary Market Auction.
“Afterwards, we envisage the trend of lower yields on T-bills to continue as market participants take positions due to expectations of further decline in auction stop rates amidst the CBN’s continued absence from the OMO primary market, ”Analysts at Cordros Research stated in an emailed note.
