DMO Targets N140bn FGN Bond, Raised N607m From Savings Bond

By Nse Anthony-Uko,
(Sundiata Finance) – The Debt Management Office said it plans to raise N140 billion through an auction of Federal Government bonds even as it raised N607.26 million through the FGN Saving Bond auctioned earlier in the month.
Auction result of the FGN Savings Bond showed that investors interest in the bond continues to wane as the amount raised was 23 per cent lower than what was raised in the May auction. Last month, it had raised N790.85 million through the sales of the 2-year 2019 and 3-year 2020 FGN Savings bond. The bonds had been raised at 13.189 per cent and 14.189 per cent respectively.
In total, the DMO has so far raised N4.754 billion through the Savings bond since its debut in March this year. However, the amount raised has since been on a decline as what was raised in May was lower than N1.288 billion that was raised in April and N2.068 billion raised in March.
Managing director and chief executive of Cowry Assets Management Company, Johnson Chukwu noted that the declining participation of investors is due to the economic condition of the country. He explained that “investor had put in their extra money at the initial auctions and when there is no extra income coming in, they can’t put in more.
“As the economy improves we expect to see improved participation in the FGN Savings Bond” he stated. The DMO had launched the Savings Bond in encourage participation of retail investors in the country in the bond market.
Meanwhile, the debt office said it will sell N40 billion of bonds due in 2021 and N50 billion each of bonds due in 2027 and in 2037, using a Dutch auction system this Wednesday, June 21, 2017. Settlement is expected the day after the sale. The bonds are re-openings of previous issues.
Also, the Central Bank of Nigeria had announced plans to sell N133.24 billion worth of Treasury bills at an auction this week. Nigeria, issues sovereign bonds each month to help fund its budget deficit, support the local debt market and maintain a benchmark for companies to follow.
The federal government has said it will raise funds through local and external debt to finance its budget deficit of N2.36 trillion this year as it tries to spend its way out of a recession. It expects to raise money to cover more than half the deficit from the local market. It has already commenced the roadshow for a $300 million diaspora bond and also has lined up, a N100 billion debut domestic Sukuk this month.

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