Nigeria’s Debt Management Office, DMO, said it has allotted the sum of N116.98 billion to some 109 individuals whose bids were successful during the Federal Government’s January 2019 bonds auction.
A statement published Wednesday on the agency’s website disclosed that although the initial value of the bonds was N150 billion, over N197 billion worth of subscriptions were received from investors; indicating 131% over-subscription rate.
Despite the over-subscription, the Debt Management Office said it acted “in accordance with its policy of keeping the Government’s borrowing costs at prudent levels” by choosing to allot a total of N116.98 billion.
Breaking down the subscriptions
Note that there were three categories of bonds issued in January, the duration periods of which ranged from five, seven, and ten years.
Most investors preferred the ten-year bond which received a subscription level of 299%.
“At the first FGN Bond Auction for 2019 on Wednesday, January 30, 2019, the Debt Management Office (DMO) offered 3 instruments with total value of N150 billion. Total subscriptions from investors for the bonds was over N197 billion, indicating a subscription level of 131%.
Successful bids were allotted at the rate of 15.20% for the 5-year, 15.25% for the 7-year and 15.35% for the 10-year bonds. The rates for the allotments were consistent with the yields in the secondary market.”– DMO
About the FGN Bonds and the DMO
The Federal Government of Nigeria, through its Debt Management Office, offers monthly sovereign bonds to the investing public in efforts to regulate and maintain benchmark for corporate bonds issuance, support the local bond market, and most importantly, raise capital for the funding of budget deficits.
The Debt Management Officer, DMO, was established in 2000 and charged with the responsibility of managing the country’s debts, albeit in a centrally coordinated manner. Prior to the establishment of the DMO, the management of Nigeria’s debts was said to have been managed by different agencies, making the process somewhat uncoordinated.