DMO: Five-year FGN Bond Oversubscribed by 60%


Ndubuisi Fràncis in Abuja

The newly-floated federal government bond with five-year tenor was oversubscribed by 60 per cent, the Debt Management Office (DMO) revealed thursday.

The DMO conducted the fourth in the series of federal government Bond Auctions for 2018 on April 25, to raise funds for the implementation of the yet-to-be- passed 2018 budget.

The bond auction results released by the DMO indicated that the five- year tenored bond was oversubscribed by 60.9 per cent.
Three bonds (five, seven and ten years) were offered for a total amount of N90.00 billion.
Total subscription was N262.48 billion, a subscription rate of 292 per cent.

According to the DMO, each of the bonds was oversubscribed, with demand for the 10-year bond particularly strong at a rate of 534 per cent.

A total of N90 billion was allotted at 12.75 per cent for the five-year bond, 12.85 per cent for the seven-year bond and 12.89 per cent for the ten-year bond.

The DMO stated that interest rates at the auction continued to trend downwards, as was the case at the March 2018 auction, adding that the rates for all the bonds offered at the April Auction were below 13 per cent.
“The drop in rates is consistent with the DMO’s expectations, based on its redemption of Nigerian Treasury Bills, which started in December 2017.

“The funds injected into the market through the redemptions, and the lower interest rates, are supposed to make credit available to private sector borrowers at lower rates. “This should enable them to lower their cost of operations and be more competitive in pricing,” the DMO said.