Debt Office Hikes Interest Rates on Nigerian Bonds
The Debt Management Office (DMO) hiked spot rates on Federal Government of Nigeria (FGN) bonds at the primary market auction conducted on Monday. The DMO conducted its monthly bonds auction with two offers across 5- and 7-year reopenings worth N460 billion available for subscriptions.
Market participation was weaker than anticipated despite excess liquidity in the financial system at the time, though subscription still surpassed offer size with significant appetite for longer duration.
Investors demanded higher rates despite disinflation and the expectation of an interest rate cut this week. Total subscription for the November auction sales came at N657.26 billion, which was N197 billion above the offer size, according to auction results obtained by MarketForces Africa.
Investors showed appetite for 7-Year bonds which was oversubscribed significantly, while 5-year reopened papers underperformed. Investors’ subscriptions for 5-Year bonds settled at N147.87 billion, which is below N230 billion worth of local papers opened by the DMO for subscription.
Demand for 7-year bonds attracted N509.39 billion, higher than N230 billion offer size made available for investors’ subscription at the auction.
It was noted that the DMO sold local bonds worth N583.52 billion to investors across the two tenors at the close of the auction on Monday. The amount of 7-Bonds sold is equivalent to 77% of aggregate subscriptions attracted at the auction.
The DMO allotted N134.88 billion worth of 5-Year bonds to investors, underperforming its N230 billion expectation as investors’ appetite for short end tenor weakened.
The spot rate for 7-year reopened bonds was priced at 16%, which is 15 basis points above the previous auction rate. The spot rate for 5-year reopened bonds was priced at 15.90%, up from 15.832% in the prior auction. MTN Nigeria Sets to Pay Shareholders Interim Dividend
