DMO Slashes Interest Rate on Nigerian Bond, Rejects Excess Bids
The Debt Management Office (DMO) slashed the rate on Nigerian bonds maturing in April 2029 at the primary market auction, a move that was supported by excess demand from investors seeking to take positions in the naira assets.
The authority floated N100 billion in bonds for subscription across reopening and a fresh issue of N50 billion each. The authority allotment matched its total offer but reduced the rate on the 5-year bond that was reopened.
Details from the auction results showed that aggregate demand was 6 times more, allowing the authority to hack spot rates on both reopened and new issues.
Total subscriptions settled at N602.855 billion as against N100 billion that was offered to investors for sales. In its commentary note, AAG Capital Limited said investors preference for duration remained robust as newly issued FGN bonds recorded a staggering bid-to-cover ratio of 11.2x, clearing at 17.95%.
The reopened FGN bonds maturing in April 2029 continue to reflect investors’ weak sentiment, attracting N41.69 billion in subscription at a significantly lower spot rate.
The breakdown showed that DMO offered N50 billion worth of newly issued bonds, but subscription came at N561.170 billion. Hence, the DMO sold N98.95 billion worth of fresh bonds maturing in 7 years at the rate of 17.95%.
The April 2029 FGN bond that was reopened attracted N41.485 billion from investors, below N50 billion that was floated for subscription. Spot rate on the 5-year bonds fell by 123 basis points to close at 17.75%.
In the secondary market, trading activity remained subdued following June bond auction, with only sporadic interest in the 2029s, 2031s, 2033s, and 2053s tenors. The May 2033s saw limited transactions at 18.45%–18.60%, while overall volume stayed thin. The session closed with average yields declining 14 bps to 18.10%. #DMO Slashes Interest Rate on Nigerian Bond, Rejects Excess Bids Oil prices Rise Sharply in 1-Week over Israel, Iran Conflict
