The Federal Government of Nigeria (FGN) Bond Auction for June 2018, has been oversubscribed once again.
A statement from the Debt Management Office (DMO) last night said the auction which held yesterday June 27, 2018, was “oversubscribed as investors bid for N66.7 billion compared to the N60 billion offered.”
Yesterday’s bonds offer by the DMO were for three tenors of five years, seven years and ten years.
According to the DMO, the oversubscription was “in spite of the FX sale of $210 million by the CBN on Thursday last week, which mopped up over N65 billion from the market.”
DMO said investors interest in Nigeria’s bonds is coming on the heels of the recent mop up of over N200 billion from the system through the sale of Open Market Operations (OMO) Bills on Monday by the Central Bank of Nigeria (CBN).
The FX sale and the OMO Auction the DMO said “tightened market liquidity and pushed up interest rates.”
However, to moderate Debt Service Costs, the DMO noted that it “adopted a conservative approach by allotting only N31.2 billion at rates between 13.50 per cent and 13.81per cent.”
On March 21, this year, the DMO auctioned bonds for the implementation of the 2018 budget. The oversubscribed “Bonds were also offered in three tenors – 5, 7 and 10 years, to meet the needs of the various investor categories.”
Total subscription at the March Auction was N142.81 billion, representing 204 per cent of the amount offered.
“The subscription rates for the 5, 7 and 10 year Bonds were 189 per cent, 84 per cent and 329 per cent respectively, showing the preference of investors for the 10-year Bond.”
The DMO noted that “based on the bids received, a total of N64.06 billion was allotted and the rates were 13.40 per cent for the five-year, 13.53 per cent for the seven-year and 13.60 per cent for the 10-year Bond.
In April, the FGN issued bonds to raise funds for the Federal Government to implement the 2018 budget, these bonds were also oversubscribed.
After the April bond auction, the DMO said the bond was oversubscribed by 292 per cent.
According to the DMO, “three bonds (5, 7 and 10 years) were offered for a total amount of N90.00 billion. Total subscription was N262.48 billion, a subscription rate of 292 per cent. Each of the bonds was oversubscribed, with demand for the 10-year bond particularly strong at a rate of 534 per cent.”