FGN Bonds 2015: Banks top other borrowers in total allotment

• Rates to moderate as inflows exceed

Latest figures from the Debt Management Office (DMO) have shown that Deposit Money Banks (DMBs) got more allotment at 27.54 per cent of the total FGN Bonds allotted in the year, 2015.

Analysis of Federal Government (FGN) Bonds allotments by investor-type depicts that the banks were followed by Fund Managers & Non-Bank Financial Institutions at 22.31 per cent, while government agencies at 22.19 per cent ranked third in the total FGN Bonds allotment.

This is just as dealers expect the Nigeria Interbank Offered Rate (NIBOR) to moderate as inflows via maturing treasury bills and expected FAAC disbursements, exceed the outflows. Central Bank of Nigeria will auction treasury bills worth N127.96 billion, viz: 91-day bills worth N36.78 billion; 182-day bills worth N39.17 billion; and 364-day bills worth N52 billion on Wednesday, 20 July.

Also, treasury bills worth N259.47 billion will mature on Thursday, 21 July, viz:91-daybillsworth N36.78 billion; 182 day bills worth N39.17 billion; 364-day bills worth N52 billion; and 174 day bills worth N131.52 billion.

Analysts expect the auction to be oversubscribed as investors with unsuccessful bids at Wednesday’s DMO primary market auction redirect their attention to the T-bills auction considering the high stop rates at the previous auction.

The just released 2015 Annual Report of the DMO indicated that Pension Funds  got 21.88 percent of the total bonds allotted, Foreign Investors 3 per cent, Insurance  sector 1.92 per cent, Discount Houses 0.57 per cent, Retail/ Other Institutional Investors  0.32 per cent and Individuals 0.27 per cent.

The report further showed that the size of the Nigerian domestic bond market, in terms of face value, stood at N6,515.62 billion as at the end of December, 2015, compared to N5,683.46 billion in the corresponding period of 2014, representing an increase of N832.16 billion borrowings from domestic bond market or 14.64 per cent growth in in  one year.

Further, breakdown showed that the proportionate share of Federal FGN Bonds increased to 89.14 per cent in 2015 compared to 84.32 per cent in 2014.

The State Government Bonds decreased to N457.38 billion in 2015, from N638.90 billion in 2014, resulting in a decrease in their relative share from 11.24 per cent in 2014 to 7.00 per cent in 2015.

The outstanding Corporate Bonds as at end of 2015, remained almost at the same level in 2014, but with a proportionate share of 3.47 percent in 2015, which was slightly lower than the 4.00 percent recorded in the corresponding period of 2014 it showed.

The report also showed that the number of States that accessed the domestic bonds market in 2015 was relatively high compared to 2014. Seven (7) States raised funds from the capital market in 2015, with a total Face Value of N60.95 billion, which represented a huge increase from the N15.00 billion recorded in 2014. Plateau State alone accounted for 46.27 percent of the total Bonds issued by the seven States in 2015.

Despite the removal of FGN Bonds from the GBI-EM, the Nigerian Bonds Market has continued

to thrive, due to its diverse and strong domestic investor base, existence of an active Two-Way

Quote Secondary Market and the collective resolve of all market stakeholders to continue to

Develop and strengthen the domestic bond market, DMO stated.