DMO to auction N225bn worth of local bonds

The Debt Management Office (DMO) will auction N225 billion worth of local bonds this week.

The auctions would be through N75 billion a piece for the 14.55 per cent Federal Government of Nigeria (FGN) April 2029, 12.50 per cent FGN April 2023, and 16.25 per cent FGN April 2037 re-openings.

Hence, dealers expect the stop rates to moderate, as DMO might mirror the declining trend in the money market stop rate.

Meanwhile, the debt office has lamented that the Central Bank of Nigeria (CBN)’s policies are having adverse effects on the liquidity at the financial markets, making it difficult to sell even sovereign instruments that are regarded as risk-free.

Director-General, DMO, Ms. Patience Oniha, made this disclosure at the IFN Africa Dialogue and Report 2022, which was streamed live on YouTube, recently.

She pointed out that “in the domestic market, rates have gone up. So, the amount of liquidity available for banks to invest in Federal Government of Nigeria (FGN) securities and probably other securities are limited.”

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In October, the DMO could not raise N117 billion from the sale of FGN’s N225 billion bond programme because subscription weakened during the October FGN bond auction.

The DMO offered N225 billion for subscription to investors but was only able “to raise N107.88 billion through re-openings of the 14.55 per cent FGN APR 2029, 12.50 per cent FGN APR 2032 and 16.25 per cent 2037 FGN bonds”.

This implies that as the Federal Government is having difficulty raising funds to finance its budget, the widened budget deficit may further put pressure on government’s finances, especially in the areas of capital projects.