FG Seeks N225bn In New Bond Auction
The Federal Government will today conduct its regular monthly bond auction with a target to raise N225 billion to further bridge its budget deficit.
The Debt Management Office (DMO), which oversees government’s bond issuances and general debt management, would be raising N225 billion through reopening of three previously issued mid-to-long term bonds.
The bonds being reopened include the 14.5500 per cent 10-year bond, which matures in April 2029. Also being reopened is the 12.5000 per cent 10-year bond, which matures in April 2032 and the long-term 16.2499 per cent 20-year bond with maturity date of January 2037. The previous stop rates for the three bonds were 14.50 per cent, 15.00 per cent and 16.00 per cent respectively.
Government plans to raise N75 billion each from the three bonds, totaling N225 billion. Nigeria depends on regular debt issuances to finance budget deficits as poor infrastructure and insecurity continue to threaten government’s revenue.
The DMO had last week offered two tranches of its monthly Federal Government of Nigeria Savings Bonds (FGNSBs). The November 2022 issuance was the 65th tranche of the savings bond, introduced in 2017.
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The government had offered the two-year sovereign retail bond at a coupon of 12.492 per cent with maturity on November 16, 2024. It also simultaneously offered three-year FGNSBs at a coupon of 13.492 per cent with maturity on November 16, 2025. Minimum subscription to the pro-low savers bonds was N5,000 with maximum subscription per subscriber capped at N50 million.
The FGNSBs are designed to have most of the features of the existing sovereign bond but with other benefits to the bondholder, including low amount of minimum subscription, listing on stock exchange and trading on the bonds. It will also be backed by the full faith of the Federal Government of Nigeria and is therefore deemed risk-free. The coupon is paid on a quarterly basis, providing investors with a regular stream of incomes.
The FGNSB was introduced in 2017 as a mass instrument for nationwide mobilization of savings and investments.
