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Tag: DMO

  • DMO chief defends Nigeria’s $66b debts

    DMO chief defends Nigeria’s $66b debts

    There is no need to worry about Nigeria’s over $66 billion (over N10 trillion) debts, the Debt Management Office (DMO) has said.

    The money was well invested, DMO Director General Dr. Abraham Nwankwo said.

    Nwankwo spoke at an interactive session with Finance reporters in Abuja.

    He said: “Our total domestic debt for the Federal Government, states and the FCT is about N8.9 trillion (about $48 billion) and the external debt is about $9.38 billion. If you combine the two in one currency, you will find the debt to GDP ratio is about 12.51 per cent, which is much lower than the 26 per cent debt to GDP that is allowed countries in our peer group.”

    The states’ and the FCT’s portion of the domestic debt is about $10 billion (about N1.151 trillion), excluding the external component which stands at a little above $3billion.

    In Nwankwo’s view, one key achievement of the DMO is the development of longer tenor instrument of between two to 20 years in the debt market, which has paved the way for 23 Nigerian companies in the last five years to raise locally N223 billion through the issuance of bonds.

    “This is a development, which was unthinkable before now where only short term instruments of three months and one year were prevalent,” he said.

    Anti-borrowing advocates may have to push their case further. Nwankwo said the government would not shy away from aggressive borrowing, but will allow the private sector to take over in raising cheap funds for the development of the manufacturing, agriculture and other vital sectors while the government will just be a regulator.

    The DMO plans to focus on encouraging the private sector to take the front seat “in raising funds for development both locally and internationally to finance most of the projects that the government undertakes and the government would not be tempted to borrow more in view of its current low Debt to GDP ratio as a result of the recently rebased Nigerian economy”.

    On the nature of the nation’s debt profile, the DMO boss said part of the Federal Government’s portion, about $1.5 billion raised from the international debt market (the Eurobond) is being invested in the power sector to improve the power.

    “The funds is also financing the Nigerian Bulk Electricity Bulk Trader (NBET) and for the Nigeria Gas to power project,” Nwankwo said, adding: “Part of the monies borrowed was used for the dualisation of the Abuja International Airport Road in Abuja ; the dualisation of the Zuba – Anuja Expressway ; the opening of new districts in the Federal Capital Territory and the investment for the upgrade of the cotton industry. There are so many other projects with which these monies have been deployed across the country and they are there for people to see.”

    On the international debt market, Nwankwo said Nigeria’s issuance of a Sovereign bond paved the way for nine Nigerian firms to issue bonds at the international debt market, raising $3.4 billion “because Nigeria was already benchmarked and the firms didn’t have to raise the funds at very high cost”.

  • Nigeria’s debt is N10.1 tr, says DMO

    Nigeria’s debt is N10.1 tr, says DMO

    The Director General,  Debt Management Office (DMO), Abraham Nwankwo yesterday in Abuja, said the country’s debt profile currently stands at N10.1trillion.

    The information about the national debt profile shocked the National Conference Committee on Public Finance and Revenue which promised to explore ways of discouraging states from unwarranted borrowing.

    Chairman of the Committee, former Governor of Bauchi State, Adamu Aliero said states must be discouraged from borrowing, arguing that they are usually not able to service debts. This he said will inevitably impact on the nations and its people.

    He promised to invite the Director General, Budget Office,  Bright Okogwu  to brief the Committee today to further throw light on the nation’s debt profile and its management in relation to the implementation of the budget

    Earlier, Nwankwo had said as at March, this year, the country’s total external and domestic debt for the federal and state government including the Federal Capital Territory (FCT) stood at N10.1 trillion.

    He gave the breakdown as  $9.16billion external debt with the states, including the FCT responsible for 32 percent or $2.8billion while the Federal Government borrowed $6.3billion or 68 percent of the total debt.

    Domestic debt was put at N8.7 trillion with the states and the the FCT responsible for 17 per cent.

    According to him, the debt profile of about 12 per cent of the country’s Gross Domestic Product (GDP) is a low debt-GDP ratio and healthy for the country.

    He however warned that it is not a reason for the country to go on borrowing spree because public revenue has not increased. “Nobody should be under any illusion that the country should go on borrowing more. The country will continue  to maintain a conservative borrowing stance,” he added.

    He also told the committee that the fear of politicising debt profile of states was responsible for not releasing full details of debt profile of states to the public.

    He said: “It is not appropriate to bring details of states’ debt profile because we don’t need to politicise debts of states; it doesn’t make sense to politicise the debts of states because it is counter productive.

    “That was why I said we are not going to say or do anything to politicise the debts of states because the states are very cooperative with the Federal Government to make sure how much they owe to the last kobo.”

    “In that constructive process, it doesn’t make sense to talk in such a way to be throwing figures which many people will misunderstand instead of asking for clarification before arriving at conclusions”.

  • National Conference wants limited borrowing powers for States

    National Conference wants limited borrowing powers for States

    National Conference Committee on Public Finance and Revenue has expressed concern of over the country’s N10.1 trillion debt profile.

    It said it would explore means of how to discourage States from unwarranted borrowing.

    The Committee’s decision followed the disclosure of the country’s debt profile put at N10.1 trillion by the Director General of the Debt Management Office (DMO), Bright Okogwu yesterday.

    Chairman of the Committee, former governor Adamu Aliero said States must be discouraged from borrowing that they would not be able to service as it has the potentials of impacting negatively on the people.

    He said the Director General of the Budget Office would be  invited to brief the Committee today to further throw light on the nation’s debt profile and its management in relation to the implementation of the budget

    Earlier, DMO DG, Okogwu had disclosed that as at March, 2014, the country’s total external and domestic debt for the Federal and State government including the Federal Capital Territory (FCT) is N10.1 trillion.

    He gave the breakdown as  $9.16b external debt with the States, including the FCT responsible for 32 percent or $2.8b while Federal government borrowed $6.3b or 68 percent of the total debt.

    Domestic debt was out at N8.7 trillion with the States and the the FCT responsible for 17 percent.

     

    According to him, the debt profile of about 12 percent of the country’s Gross Domestic Product (GDP) is a low debt-GDP ratio and healthy for the country.

     

    He however warned that it is not a reason for the country to go on borrowing spree because public revenue has not increased. “Nobody should be under any illusion that the country should go on borrowing more. The country will continue  to maintain a conservative borrowing stance,” he added.

     

    He also told the committee that the fear of politicizing debt profile of States was responsible for not releasing full details of debt profile of States to the public.

     

    He said: “It is not appropriate to bring details of States’ debt profile because we don’t need to politicize debts of States, it doesn’t make sense to politicize the debts of States because it is counter productive.

     

    “That was why I said we are not going to say or do anything to politicize the debts of States because the States are very cooperative with the Federal government to make sure how much they owe to the last kobo.

     

    “In that constructive process, it doesn’t make sense to talk in such a way to be throwing figures which many people will misunderstand instead of asking for clarification before arriving at conclusions”.

     

    He however said the aggregate debt information on State basis can be found on the agency’s website.

     

  • DMO to sell N90bn worth of bonds

    The Debts Management Office (DMO) at the weekend said it would sell N90 billion in three-year and 10-year Federal Government bonds.

    This is contained in the DMO March 2014 FGN Bond Offer Circular, posted on the company’s Website.

    The posting indicated that the bonds would mature in August, 2016 and March, 2024, respectively.

    It said that both would be auctioned on March 12 with settlement dates of March 14, this year.

    The DMO also said that the N90 billion worth of bonds comprises N45 billion of three-year paper and N45 billion in the 10-year paper.

    It added that the 10-year bonds were re-opened but the 20-year bonds were new issues.

    The DMO said that the 2016 instruments attracted 13.05 per cent coupon rate, while that on the 2024 instruments were not yet known.

    The News Agency of Nigeria (NAN) reports that the sale is the third monthly debt auction for 2014.

    NAN recalls that the DMO on Feb. 12, issued two tranches of Federal Government bonds, totaling N90 billion to investors.

  • Currency in circulation hits N1.57tr, says CBN

    Currency in circulation hits N1.57tr, says CBN

    Currency-in-circulation has increased by 1.4 per cent to N1.57 trillion monthly, a report from the Central Bank of Nigeria (CBN) has said.

    The Economic Report for last November released at the weekend said the figure is an increase from the development relative to the preceding month reflected the 3.9 per cent increase in currency outside banks.

    Total deposits at the CBN amounted to N6.3 trillion, indicating a decline of 3.7 per cent below the level at the end of the preceding month. The development, it said, reflected the respective decline in all its components, the DMBs, Federal Government and private sector deposits.

    Of the total deposits, the percentage shares of the Federal Government, banks and private sector were 49.9, 45.4 and 4.7 per cent, respectively, compared with 50.7, 44.7, and 4.6 per cent at end- October 2013.

    Available data indicated that money market indicators were relatively stable during the review month as funds from matured government securities coupled with the N702.54 billion fiscal injection from the statutory allocation kept the market sufficiently liquid.

    Also, Federal Government of Nigeria (FGN) Bonds and Nigeria Treasury Bills were issued on behalf of the Debt Management Office (DMO) for the fiscal operations of the Federal Government. The Monetary Policy Committee (MPC) at the end of its meeting held between November 18 and 19, voted to continue with the banks’ restrictive monetary policy stance, thus maintaining the key financial indicators at their current levels.

    Provisional data indicated that the total value of money market assets outstanding at end-November

    2013 was N6.6 trillion, indicating a decline of 2.01 per cent, in contrast to the increase of 0.3 per cent at the end of the preceding month. The development was attributed, largely, to the 3.4 and 0.32 per cent decrease in FGN Bonds and Commercial Paper.

    Provisional data indicated a general increase in banks’ deposit and lending rates during the review month. The average savings rates rose to 2.53 per cent in from 2.39 per cent in the preceding month. Similarly, all other deposit rates of various maturities rose from a range of 4.28 – 7.72 per cent in the preceding month to a range of 5.29 – 8.26 per cent in the review month.

     

    The average term deposit rate rose by 2.1 percentage points to close at 7.21 per cent at the end of the review period. Similarly, the average prime and maximum lending rates rose by 0.07 and 0.1 percentage point to 17.17 and 25.0 per cent in the review month.

    The spread between the weighted average term deposit and maximum lending rates narrowed by 1.1 percentage point to 17.79 per cent in November 2013. Similarly, the margin between the average savings deposit and maximum lending rates narrowed by 0.04 percentage points to 22.47 per cent at the end of November.

    At the interbank call segment, the weighted average rate which stood at 11.08 per cent at end-October, rose by 0.07 percentage point to 11.15 per cent at end-November 2013. Similarly, the weighted average rate, at the open-buy-back (OBB) segment, rose by 0.01 percentage point to 11.00 per cent from the level in October 2013.

    The Nigerian inter-bank offered rate (NIBOR) for the 7-day segment rose by 0.20 percentage point to close at 11.59 per cent, while the 30-day segment declined by 0.01 percentage point to close at 12.08 per cent in the review month.

  • DMO stifles development, says WAIFEM chief

    DMO stifles development, says WAIFEM chief

    Director-General, West African Institute for Financial and Economic Management (WAIFEM), Prof Akpan Ekpo, has said the creation of the Debt Management Office (DMO) to manage Nigeria’s debt profile is a minus for the economy.

    Speaking at the weekend during the yearly workshop of Finance Correspondents Association of Nigeria (FICAN) in Ogun State, he said such institutions ended up impoverishing the future generations.

    He said the DMO regularly issues debt instruments which creates more debts for the economy and stifle funds that could have gone into infrastructure funding.

    He said in most cases, the raised funds are not channeled into building viable infrastructure that supports economic growth and development but are wasted on frivolous projects.

    Ekpo said in 2004, Nigeria’s debt stock amounted to about $46.6 billion, which comprised $35.9 billion of external debt and $10.7 billion of domestic debt. He said high debt service costs on Nigeria’s $30.4 billion Paris Club debt had tremendously strained public finances, crowding out space for other necessary social expenditure and investments in public infrastructure.

    However, he said as part of the successful debt negotiation process with the Paris Club, Nigeria paid its creditors outstanding arrears of $6.4 billion, received debt write-off of $16 billion on the remaining debt stock (under Naples terms), and purchased its outstanding $8 billion debt under a buy back agreement at 25 per cent discount for $6 billion.

    The entire debt relief package totaled $18 billion, or a 60 per cent write-off in return for $12.4 billion payment of arrears and buyback.

    He said the exercise involving the buyback was unprecedented and represented an “unnatural” solution under the Paris Club protocol for a low-income country; it was the second largest – debt relief operation in the Club’s 50-year history. Such was the debt exit deal that succeeded in eliminating the country’s external debt overhang syndrome.

    Meanwhile, Nigeria’s total debt now stands at N8.32 trillion ($53.42 billion), the DMO has said.

    The latest statistics released by the DMO on its website showed that at the end of September, the total debt comprised the external debts of the Federal Government and the state governments as well as the domestic debt component of the Federal Government.

  • Nigeria’s debt stock increases to N8.32 tr

    Nigeria’s debt stock increases to N8.32 tr

    Nigeria’s total debt stock has risen to N8.32 trillion, data from the Debt Management Office (DMO), has shown.

    The country’s debt stock, which grew to this level in September, represents an increase of 10.20 per cent from the December 31, 2012 figure of N7.55 trillion.

    Data from the Debt Management Office (DMO) showed that the external debt (Federal Government and states) accounted for 15.50 per cent of the total debt stock at N1.29 trillion ($8.26 billion) at an exchange rate of N155.75/$1), while domestic debt stock accounted for 84.50 per cent of the total debt stock at N7.03 trillion.

    The National Debt Management Framework (2013-2017) prepared by the Debt Management Office (DMO) has advocated an optimal ratio of domestic debt to external debt by the Federal Government to be 60:40, as opposed to the distribution of about 84:16 as at the third quarter of the year.

    According to the DMO data, external debt contributed about 13.59 per cent to the total debt in the second quarter of the year.

    There was also an increase in the contribution of external debt to the total debt stock in the third quarter of the year, these increases were as a result of “the benign interest rate environment in the international financial system, which the Federal and state governments utilised to their advantage.”

    The DMO had ruled that the maximum amount that the country can borrow in next year is N1,249.52 trillion or $7.834 billion (domestic and external) by the Federal Government.

    This is because by the end of the year, the total public debt/GDP ratio is projected at 22.4 per cent as a result of the country’s stance at maintaining a very conservative debt portfolio.

    As such, the borrowing limit was calculated using the benchmark of 25 per cent Present Value (PV) of Public Debt/GDP ratio for next year. Accordingly, the available borrowing space will be 2.6 per cent of the normal GDP estimated at N48,057.35trillion or US$301.3 billion.

  • Modality for disbursing $1b Eurobond coming, says DMO

    The Federal Government will soon put in place a framework for the disbursement of the $1 billion (about N156billion) raised from the international capital market in July, the Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo, has said.

    Nwankwo who spoke in Lagos at the weekend, said the government was at the final stage of coming up with the portal for the disbursement of the net proceeds of the bond to some power projects in a way that would ensure evaluation of the funding and project development.

    The government had early last month issued the Eurobond in two tranches of $500 million five-year bond with coupon of 5.125 per cent and $500 million 10-year bond with coupon of 6.375 per cent to finance gas-to-power projects.

    Nwankwo said the framework will specify allocations, timelines for disbursement, reporting formats, reporting lines and stakeholders, reporting timelines and monitoring and evaluation processes for the identified projects.

    He said the framework would allow stakeholders to monitor the funding and development of the projects to build public confidence in government’s debt issuance programme.

    He said the government plans to consolidate its growing profile in the international capital market by issuing other variety of debt instruments, pointing out that the issuance of the N80 billion Global Depository Notes (GDN) approved by the National Assembly would be concluded before the end of the year.

    He added that the government plans to also raise $100 million from Nigerians in Diaspora through the issuance of a $100 million Diaspora Bond.

    He conceded that there had been a public resentment of debt issue, challenging Nigerians to look beyond debt issues to the benefits of the issuance programmes and utilisation of the funds.

    “The opening of access and establishment of the Nigerian sovereign bond in the international capital market have helped to provide foreign investors with requisite market information for investment decisions, create market benchmarks for future borrowings by the sovereign, sub-nationals and corporate and provide reliable prospectus and credible country story supportive of foreign direct investments,” Nwankwo noted.

    He pointed out that by addressing some of the challenges of public debt management, the DMO had created opportunities for the private sector to raise long-term capital for the development of the real sector and infrastructure.

    According to him, the DMO through its sustained issuance programme, has created a market for long term debt instrument that the private sector could build upon to raise fund.

    He noted that 20 firms raised over N200 billion from the domestic debt market between 2005 and last year, adding that there are opportunities for growth in terms of number and diversity of debt issuers, ranges of instruments, size and investor base.

     

     

     

     

     

     

  • DMO meeting FG’s borrowing needs-DG

    The Debt Management Office (DMO) has disclosed that the domestic debt market attracted $5.112billion from foreign investors’ holdings in Federal Government securities at the end of December 2012 compared to $500million as at end of January of same year.

    This was made known by the Director General of the DMO, Dr. Abraham Nwankwo, at a retreat for members of Financial Correspondents Association of Nigeria (FICAN) held in Lagos, weekend, titled: “Opportunities for the Private Sector from Public Debt Management Achievements.”

    According to him, the domestic debt market moves have yielded to increase in the relative share of foreign investors’ holding in government securities.

    He added that while foreign investors accounted for near zero percent in Q1 of 2011, their share had increased to 19.52 per cent as at the end of 2012.

    He stated that with the historic Paris and London Club exit, the DMO has continued to explore the domestic debt management strategy to raise finance in meeting government’s borrowing needs at prudent degree of risks.

    He re-affirmed that the Federal Government was not crowding out the private sector, as the DMO would continue to create more borrowing space for other domestic borrowers to access funds in the local market.

     

  • DMO to raise N104b through bonds today

    The Debt Management Offices (DMO) is to raise N104.8 billion ($670 million) in its monthly auction of bonds today, FBN Capital has said.It said the total sales target is higher than its projection given that the agency had raised N285 billion (gross) in just three months and that the approved 2013 budget sets domestic borrowing (net) at N577 billion.

    In a report, FBN Capital said the DMO tentatively offered Nigeria’s long bond in February to raise just N15 billion and may have been surprised by the bid of N79 billion for the paper.

    “The auctions in the past year have generated demand comfortably above projected sales, a rare exception being September. Many offshore investors may favour the longer dated treasury bills but few, if any liquid government bond markets match the yields available in Nigeria. Also, the shift by domestic institutional investors from bonds to equities has not been dramatic,” it said.

    It said that the market rally since last August driven by tight monetary policy is not exhausted, and that yields on the more liquid bonds may narrow by 100 basis points in the first half of the year.

    FBN Capital said this calendar, unlike that for the first quarter, has been prepared with an approved 2013 federal budget in place. The budget statistics showed an expenditure of N4.99 trillion, a deficit of N887 billion and domestic borrowing (net) of N578 billion. It said once the proposed $1 billion Eurobond was excluded, and the $100 million Diaspora bond, too, there would be a deficit financing gap of about N140 billion.

    The deficit, it said, could be covered by asset sales and signature bonuses, though the government’s recent track record for the first is poor and prospects for the second are undermined by the continuing impasse over the Petroleum Industry Bill in the National Assembly.

    “We accept that best practice requires a range for issuance and favours front-loading in the calendar year. Yet, the low point in the range for second quarter still looks high in the context of the DMO’s sales of bonds totaling N285 billion (gross) in first quarter and of the projection for domestic borrowing (net) in the budget,” it said.

    It said the DMO reopened the bond in February and found that it attracted the highest bid at auction (N79 billion). This vindicated the its thinking that the reopening would be well-received, given the increasing role of the Pension Fund Administrators (PFAs) and other institutional investors at auction.

    It said the total monthly bid has averaged N161 billion over the past 12 months, except for September last year when (N83 billion) auction was recorded.

    “We expect the DMO to meet the calendar comfortably. We detect a certain cooling of offshore interest in the market, and cite the sharp increase in sales at the Central Bank of Nigeria’s forex auction. That said, we feel that the good inflation story as well as Nigeria’s inclusion in the government bond indices of JP Morgan and Barclays will underpin strong demand for domestic and some offshore investors,” it said.