FG targets N135b through bonds auction next week – DMO
The Debt Management Office (DMO) on behalf of the Federal Government of Nigeria plans to raise N135 billion ($429.25 million) in naira-denominated bonds at its April 12 debt auction.
Debt Management Office disclosed on Wednesday that it would raise 35 billion naira in bonds due to mature in 2021, 50 billion naira maturing in 2027, and 50 billion naira due in 2037, using a Dutch auction system.
It further noted that settlement was expected on the day following the issue, however, the bonds are re-openings of previous issues, except the 2037 bond which is a new issue.
However, Nigeria auctions sovereign bonds on a monthly basis to help fund its budget deficit, support the local debt market and maintain a benchmark for companies to follow.
The anticipated one would make the fourth in the year as the biggest economy in Africa expects a N2.36 trillion budget deficit for 2017, with half of it funded through domestic borrowing.
Meanwhile, the last two auctions, the debt office sold more bonds than expected due to an increased demand for the local debt by investors.
Just recently, DMO introduced savings bonds for retail investors which is offered in Two- and three-year maturities, with interest paid quarterly.
According to DMO, “The bonds will be good for savings towards retirement, marriage, school fees and house projects.”
The nation’s debt office explained that savings accounts at Nigeria’s commercial banks pay up to 5 percent in interest, but the country’s inflation is running at more than 18 percent annually.
The bond offer will open on March 13 and end after five days, the debt office said. New issues will be sold every month. The minimum subscription will be 5,000 naira ($16) and the maximum 50 million naira. Nigeria’s government depends on local borrowing to fund more than half its budget deficit, which is expected to reach 2.36 trillion naira this year.
It issued a $1 billion Eurobond last month and is now seeking approval from parliament for an additional $500 million Eurobond. Last week, it said it would offer a 20 billion-naira “green bond” in April.
The government also plans to sell a $300 million diaspora bond abroad this year and its first sovereign sukuk in the local market.
Meanwhile, the 8 fold over- subscription of the recent Eurobond orders in excess of US$7.8 billion compared to a pre- insurance target of US$1bn is a strong indication that international investment community are confident in Nigeria economic reform agenda, the federal government has said.
The federal government position was contained in a bulletin of the Aso Villa, “Government at Work,” released, in Abuja, Tuesday.
According to the report, the nation’s economy is already on its road to recovery as showed in the marginal non-oil sector growth rate of 0.03 percent in 2016 Q3 (after two quarters of consecutive negative growth.
It further explained that agriculture grew by 4.54 per cent in the quarter under consideration, with growth in crop production recording nearly 5 per cent, its highest since the first quarter of 2014.
