June 2018 FGN Bond Auction Oversubscribed

The Federal Government of Nigeria (FGN) Bond Auction for June 2018, has been oversubscribed once again.

A statement from the Debt Management Office (DMO) last night said the auction which held on Wednesday June 27, 2018, was “oversubscribed as investors bid for N66.7 billion compared to the N60 billion offered.”

Yesterday’s bonds offer by the DMO were for three tenors of five years, seven years and ten years – were offered.

According to the DMO, the oversubscription was “in spite of the FX Sale of US$210 million by the CBN on Thursday last week, which mopped up over N65 billion from the market.”

Investors interest in Nigeria’s bonds the DMO said is coming on the heels of the recent mop up of over N200 billion from the system through the sale of Open Market Operations (OMO) Bills on Monday by the Central Bank of Nigeria (CBN).

The Foreign Exchange (FX) sale and the OMO Auction the DMO said “tightened market liquidity and pushed up interest rates.”

However, to moderate Debt Service Costs, the DMO noted that it “adopted a conservative approach by allotting only N31.2 billion at rates between 13.50% and 13.81%.”

On March 21, 2018 the DMO auctioned bonds for the implementation of the 2018 Budget. The oversubscribed “Bonds were also offered in three tenors – 5, 7 and 10 years, to meet the needs of the various investor categories.”

Total subscription at the March Auction was N142.81 billion, representing 204% of the amount offered.

“The subscription rates for the 5, 7 and 10 year Bonds were 189%, 84% and 329% respectively, showing the preference of investors for the 10-year Bond.”
The DMO noted that “based on the bids received, a total of N64.06 billion was allotted and the rates were 13.40% for the 5-year, 13.53% for the 7-year and 13.60% for the 10-year Bond.

In April, 2018, the Federal Government of Nigeria (FGN) issued bonds to raise funds for the federal government to implement the 2018 budget, these bonds were also oversubscribed.

After the April bond auction, the Debt Management Office (DMO) said the bond was oversubscribed by 292%.

According to the DMO, “three bonds (5, 7 and 10 years) were offered for a total amount of N90.00 billion. Total subscription was N262.48 billion, a subscription rate of 292%. Each of the bonds was oversubscribed, with demand for the 10-year bond particularly strong at a rate of 534%.”

 

Source: The Nation