The Federal Government is to raise N135 billion in bonds during an auction billed to hold next week. This was disclosed in a circular issued yesterday by the Debt Management Office (DMO). N35 bilion 5 year bonds will be issued at a rate of 14.5%. N50 billion worth of 10 year bonds will be issued at 16.2884%. N50 billion worth of 20 year bonds will be issued at 16.2499%. The bonds are reopening of previous issues.
In a bond reopening, additional amounts of a previously issued bond. Reopened bonds have the same maturity date and interest rate as the original bonds, but a different issue date and usually a different price.Unlike treasury bills, bonds have a longer tenure and interest may be paid quarterly or bi annually.
A fall in crude oil prices and production volumes, lead to a shortfall in the Federal Government budget, hence the rapid issuance of bonds to meet its financial obligations.The DMO had earlier in the week announced the opening of a N100 billon Sukuk bond which will be closing this week.
Here is a copy of the circular.