DMO Resumes Monthly Auctions, Offers N75bn FGN Bonds

The Debt Management Office (DMO) has resumed its monthly bond auctions, offering a total of N75billion FGN bonds, made up of N20billion for the 3-year tenor, N25billion for the 10-year tenor and N30billion for the 20-year tenors. A statement issued over the weekend by the DMO stated that the variety of the tenors on offer, namely 3, 10 and 20 years, was to give investors the opportunity to choose the bond(s) most suitable to their needs and investment objectives.

According to the statement, “the auction was very successful as evidenced by the subscription levels of each tenor. Sixty-five bids for N40.43bilion were received for the 3-year bond while for the 10-year bond the corresponding figures were 74 and N42.10billion respectively. For the 20-year bond, a total of 76 bids for N65.50billion were received”.Moreover, the statement disclosed that all the bonds on offer were allotted at the marginal rates of 6.8299 per cent, 8.14 per cent and 8.50 per cent for the 3-year, 10-year and 20-year tenor respectively.

“A non-competitive bid of N18.5billion for the 3-year tenor was also allotted at the marginal rate of 6.8299%”, the statement also stated.

The DMO also noted that the range of bid rates for each tenor was fairly consistent with those of the last auction held in November, 2009 which indicated that the liquidity and interest levels in the market are stable and that investors’ perception of the bonds as safe and liquid has not changed.

It would be recalled that the DMO indicated during its last auction in November, 2009 that the sustained interest in the bond market means that the market holds a lot of promise in 2010. According to DMO, as a mark of increasing confidence in FGN Bonds, investors oversubscribed the N65billion bonds offered in tenors of 3, 10 and 20 years by the DMO at the final auction for 2009.

The breakdown given by the DG DMO, Dr. Abraham Nwankwo, said the auction results showed that whereas it offered N15billion of the 3-year bond, total subscription was N43.40billion, representing a subscription rate of over 289 per cent.

“For the 10-year bond, which was being offered for the second time in 2009, the total subscriptions received was N30.43billion or 152 per cent of the N20billion that was offered”, it also said. 

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