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Debt Securities

FG announces the auction of N150 billion bond in March

The DMO has announced that the Federal Government will offer N150bn bonds for subscription in March.

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Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

The Debt Management Office (DMO) Wednesday announced that the Federal Government will offer N150bn bonds for subscription in March.

They are a N50 billion 10-year re-opening bond to be offered at the rate of 16.888% that will mature in March 2027, a N50 billion 15- year re-opening bond to be offered at 12.5% that will mature in March 2035, and the third and longest bond which is an N50 billion 25-year re-opening bond to be offered at 9.8% and mature in July 2045.

This disclosure is contained in a circular issued by the DMO on its website showing the breakdown of bonds comprising of 3 bonds worth N50 billion each.

The DMO in its statement said that the bond which has an auction date of March 24, 2021, and a settlement date of March 26, 2021, is to be auctioned at N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The DMO also noted that the interest payment is made semi-annually with the redemption expected to be a bullet repayment on the maturity date.

What you should know

  • It can be recalled that the DMO had earlier disclosed that the Federal Government’s bonds for February worth N150bn were oversubscribed by N39.51bn.
  • The total subscription received from investors for the bonds was N189.51bn, comprising of N77.05bn for 16.2884% FGN March 2027 bonds, N72.33bn for 12.5% FGN March 2035 bonds and N40.13bn for 9.8% FGN July 2045 bonds.
  • The auction result showed that out of the 78, 53 and 60 total bids for the tenures, 31, 20 and 30 bids were successful.
  • The DMO stated that a total of N80.55 billion was allotted comprising of N33.62 billion, N28.9 billion and N18.03 billion.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Debt Securities

DMO to auction N150 billion bonds for April on behalf of FG

It also states that the interest is payable semi-annually with the redemption expected to be in bullet payment on the maturity date.

Published

on

The Debt Management Office (DMO) has announced the offer of N150 billion bonds for subscription by auction in the month of April on behalf of the Federal Government.

A breakdown of the bonds shows that a 10-year reopening bond is to be offered at the rate of 16.2884% with a maturity date in March 2027; a 15- year reopening bond will be offered at 12.5% with a maturity date in March 2035; and the third and longest bond which is a 25-year reopening bond will be offered at 9.8% and mature in July 2045.

This disclosure is contained in a circular issued by the DMO on April 14, 2021, and can be seen on its website.

The circular states that the bonds which would be auctioned on April 21, 2021, have a settlement date of April 23, 2021, adding that the unit of sale is N1,000 per unit subject to a minimum subscription of N50,000 and in multiples of N1,000 thereafter.

It also states that the interest is payable semi-annually with the redemption expected to be in bullet payment on the maturity date.

READ: OPEC, NSE, MTN, other developments and how they affect your pocket

In case you missed it

  • The DMO had earlier disclosed that the Federal Government’s bonds for March worth N150bn which were auctioned were oversubscribed by N183.48bn.
  • The total subscription received from investors for the bonds was N333.48bn comprising N65.25bn for 16.2884% FGN March 2027 bonds; N110.19bn for 12.5% FGN March 2035 bonds; and N158.04bn for 9.8% FGN July 2045 bonds.
  • The auction result added that out of 82, 125 and 215 total bids for the tenures, 48, 88 and 176 were successful.
  • It stated that a total of N262.1bn was allotted, comprising of N44.01bn, N86.29bn and N131.80bn respectively.

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Debt Securities

The Nigerian treasury bills hits 9%

This increase is supposed to have a substantial impact on the Nigerian Stock exchange market.

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Nigerian Treasury Bills falls to 3.05% per annum, Implications of the new CBN stance on treasury bill sale to individuals

According to the primary market auction result, Nigerian Treasury Bills Yield held the 91-day and 182-day constant at 2.00% and 3.50% respectively.

The 364-days Bill increased by 100 base point to 9.00% from its previous 8.00% interest. This increase is supposed to have a substantial impact on the Nigerian Stock exchange market.

READ: Why interest rates on treasury bills, bonds crashed

The 91-day and 182-day bills have remained relatively constant for the 4th consecutive auction. This increase in the 364-days Treasury Bill Yield may be seen to have a negative correlation in the stock exchange market as investors sell off their volatile positions and buy risk-free assets like treasury bills.

Some analysts believe that the increase is in direct response to inflationary concerns as the CBN attempts to curb inflation without detouring growth.

READ: CBN introduces “Special Bills” as part of efforts to control money supply in the economy

What this means

  • An increase in Treasury Bill Yield may cause a drop in the Stock exchange market as analysts expect selloffs to continue towards the end of the week.
  • Persistent inflation concerns may lead the CBN to take more aggressive steps and increase the treasury bills rates even higher.
  • The banking sector is expected to benefit from the increase as they shift their focus from stock to fixed income.
  • Analysts expect that a higher yield trend will boost foreign direct investment, which is aligned with the CBN policy of increasing foreign inflows.
  • Some market participators see the increase as a good sign. However, the consensus was held for a steady slow increase rather than an eccentric rate change.

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