The Federal Government is poised to raise N120 billion through the auction of two Federal Government Bonds.
According to the Debt Management Office (DMO), the bond offering comprises a 19.30 percent April 2029 bond, a five-year reopening valued at N60 billion, and an 18.50 percent February 2031 bond, a seven-year reopening also valued at N60 billion.
Both instruments are re-openings of previously issued bonds, allowing investors to participate at current market yields.
The auction, scheduled to open on Monday will offer investors an opportunity to subscribe to reopened debt instruments, with settlement set for December 18.
This was the same amount offered in the previous month, which was one of the lowest amounts offered this year, as the Federal Government seemed to slow down on bond offerings.
Each bond unit is priced at N1,000, with a minimum subscription of N50,001,000 required. Investors can purchase additional units in multiples of N1,000.
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The yield-to-maturity bid that clears the auction volume will determine the final price for successful bidders, along with any accrued interest.
The bonds will pay interest semi-annually, providing investors with periodic returns until maturity. Redemption will occur via a bullet repayment at the end of the bonds’ respective terms, ensuring the full principal amount is returned to investors.
Compared to October, the November auction saw a 33.33 percent reduction in the total amount offered.
The DMO placed N60 billion on offer for each bond, a drop from N90 billion in October. Despite the lower offerings, total allotments rose significantly, climbing by 19.50 percent to N346.155 billion from N289.597 billion in October.
For the 5-year Bond, N63.530 billion was allotted, while the 7-year Bond recorded an allotment of N282.625 billion. In contrast, the October auction allotted N57.237 billion and N232.360 billion for the 5-year and 7-Year Bonds, respectively.
Also, investor interest far exceeded expectations, with total bids amounting to N369.585 billion—a 208 percent subscription rate.
This oversubscription highlights the market’s appetite for fixed-income instruments amid evolving macroeconomic conditions.
By: Babajide Okeowo
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