FG to raise N150 bn in monthly bond auction

THE Central Bank of Nigeria on the authority of the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria, says it wants to raise N150 billion worth of bonds in its latest offer for Subscription by Auction.

The debt office described the offer as N75 billion FGN January 2026 (10-year re-opening) with 12.50 per cent rate and  N75,000,000,000 – 13.00 FGN JAN 2042 (20-year re-opening).

The offer is in N1,000 per unit subject to a minimum subscription of N50, 001,000 and in multiples of N1,000 thereafter with auction date of February 16, 2022 and settlement date of February 18, 2022.

For re-openings of previously issued bonds, (where the coupon is already set), successful bidders would pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus accrued interest from the original issue date, the DMO stated in a notice.

The debt issuance qualifies as securities in which trustees can invest under the Trustee Investment Act; qualifies as government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds amongst other investors; listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.

It should be noted that all FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.

FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

Meanwhile, dealers from Cowry Assets Management Limited expect activity in the money market to be slightly bullish as the financial system liquidity should be boosted by the maturing N140 billion worth of Open Market Operation (OMO) bills, hence, they anticipate a fall in Nigeria Interbank Offered Rate (NIBOR) for most tenor buckets.

“We expect the stop rates to moderate – given the huge maturing OMO bills even as DMO might mirror the declining trend in the money market stop rate,” the analysts stated.

Analysts said the treasury bills market had a bullish session on Thursday, as unmet bids at the Nigeria Treasury Bills (NTB) auction drove demand. Activity on the day was skewed to long end papers, with the new one-year trading around 5.05 per cent. The CBN floated a 5.5x subscribed OMO auction where N80 billion was offered and sold, while maintaining stop rates on the 96-, 187- and 362-day tenors..