Debt Office Lists N150 billion FG Bonds for Auction
Patience Oniha, DG, DMO

Debt Office Lists N150 billion FG Bonds for Auction

The Nigerian Debt Management Office (DMO), on Wednesday, announced the auctioning of three Federal Government bonds of N150 billion at N1,000 per unit.

Details obtained from DMO’s website said that the three bonds were valued at N50 billion each, with interest rates of 16.29 per cent; 12.50 per cent and 9.80 per cent, respectively with listed the auction date as April 21, while settlement date is April 23.

Minimum units for sale are N50,001 thousand and in multiples of N1,000 thereafter. For re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned plus any accrued interest rate on the instrument,” the DMO said.

However, debt office explained that interest rates would be paid “semi-annually,” with bullet repayment on the maturity date. The office said that the bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

The bond also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds and other investors, noting that it is listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.

The DMO added that all federal government bonds qualified as liquid assets for the calculation of liquidity ratio for banks. It also assured that the bonds were backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria.

It urged interested investors to contact designated banks The DMO published the Q2-2021 bond auction calendar last week, which showed the FGN will likely remain aggressive in the primary market.

Notably, the DMO plans to raise N450 – N480bn in the bond market, split evenly across three reopening: MAR 2027, MAR 2035 and JUL 2045.

The target issuance is much lower than N635 billion raised in Q1-2020, of which N465 billion came from auction and N170 billion from the non-competitive allotment.

However, unlike Q1-2021, liquidity conditions will be relatively tight in Q2-2021 amid scanty OMO maturities, indicating that the DMO’s aggressive posture may have further price impact.

On Thursday, the National Bureau of Statistics (NBS) is expected to publish the Consumer Price Index (CPI) data for March 2021.

Read Also: Yields on Bonds Rise as DMO Issues Borrowing Plan

Debt Office Lists N150 billion FG Bonds for Auction