FG Seeks N360bn In New Bond Auction
The Federal Government will today seek to raise about N360 billion in new borrowings as part of its regular debt issuance to finance budget deficit and augment national revenue.
At the auction, the first of series of debt issuances scheduled for this quarter, the government would offer four bonds across medium to long tenors to the investing public.
The Debt Management Office (DMO), which oversees government’s debt issuance and management, has indicated it would be offering four bonds to raise N90 billion on each tenor, totalling N360 billion.
Given recent subscription and allotment pattern, market analysts expected the offers to be oversubscribed, with government likely to allot more than initial targets.
The bonds on offer, which are reopening of previous issuances, include the 10-year, 14.55 per cent April 2029 bond; the 10-year, 14.70 per cent June 2033 bond; the 15-year, 15.45 per cent June 2038 bond and the 30-year, 15.70 per cent, June 2053 bond.
Director-General, Debt Management Office (DMO), Ms Patience Oniha, had in a chat with The Nation, said there was the need to improve on the country’s debt situation.
According to Oniha, “we do not recommend that the government continues to borrow in our current levels of debt services because public debt could become unsustainable”.
Oniha lamented that the country’s debt stock “has been growing because of our borrowings in the annual budget and new borrowings approved under the medium term external borrowing plan”.
Another reason for the high borrowing, she pointed out, was “when the country went into recession based on the economic growth and recovery plan to bring the economy out of recession”.
She insisted that the government should “only borrow for priority projects that could generate revenue”.
Oniha advocated for “reduction in new borrowings by actively using public private partnerships arrangements to finance capital projects”.
The Director General of the Debt Management Office also argued that “medium to long term loans are not advisable to fund the government projects it has to be through available revenues then borrowing can be for special purposes”.
Oniha was baffled by the fact that the debt to GDP ratios of other countries like the US and the UK are yet Nigeria’s debt to revenue is high. According to her, “this means that our numbers are not adding up because of low revenue generation”.
