The Federal Government is seeking to raise N1.1 trillion from the domestic debt market on Monday as Nigeria returns to investors with three existing Federal Government bonds.
The Debt Management Office (DMO) is offering the securities through re-openings of bonds maturing in 2035, 2037 and 2038, giving institutional and other eligible investors another opportunity to increase their exposure to longer-dated government debt.
The largest portion of the August offer is N750 billion in the 15.45% FGN June 2038 bond.
Another N250 billion is being offered through the 22.60% FGN January 2035 bond, while N100 billion is available through the 16.2499% FGN April 2037 instrument.
Together, the three securities bring the amount being offered at the August auction to N1.1 trillion.
The DMO’s revised third-quarter issuance calendar had placed the August offer ranges at N200 billion to N250 billion for the 2035 bond, N50 billion to N100 billion for the 2037 security and N650 billion to N750 billion for the 2038 bond.
The auction is scheduled for August 17 with settlement expected on August 19.
All three securities are re-openings rather than newly created bonds, meaning their existing coupon rates will remain unchanged.
However, investors will determine the yields through the auction process, with successful bids allotted at the rates established by the DMO.
The latest offer follows significant demand at the government’s July bond auction.
In July, the DMO offered N1.2 trillion, split equally across the same three securities. Investors submitted subscriptions totalling approximately N1.74 trillion, substantially exceeding the amount placed on offer.
Despite the level of demand, the government allotted about N929.32 billion to the market across the three instruments.
The 2035 bond attracted subscriptions of N555.47 billion, while investors sought N665.19 billion of the April 2037 security and N518 billion of the June 2038 bond.
Successful July bids were allotted at marginal rates of 18.34% for the January 2035 bond, 18.35% for the April 2037 bond and 18.40% for the June 2038 instrument.
Monday’s auction will therefore provide a fresh indication of investor appetite for Nigerian government debt and the yields investors require to commit funds over longer maturities.
The outcome will also be closely watched for indications of the Federal Government’s domestic borrowing costs as inflation moderates and investors reassess expectations for monetary policy.
Demand from pension funds, banks, asset managers and other institutional investors could determine whether the government is able to raise the full N1.1 trillion being sought.
The DMO sells FGN bonds on behalf of the Federal Government as part of its strategy for financing budgetary requirements and managing Nigeria’s public debt portfolio.
Auction results will ultimately determine the amount raised, meaning the N1.1 trillion represents the amount being offered to investors rather than proceeds already secured by the government.
