The Debt Management Office (DMO) experienced a positive growth in its treasury bills (T-bills) sales, with a total value of N406.10bn sold across auctions in July 2023.
This marked a 0.39 per cent increase compared to the N404.51bn sold in June.
The FMDQ Exchange’s financial markets monthly report for July highlighted the DMO’s successful reopening of two 10-year, one 15-year, and one 30-year Federal Government of Nigeria (FGN) bonds, amounting to N657.84bn.
This represented a 182.73 per cent oversubscription of the offered amount and a 39.03 per cent increase from the previous month’s sales of N473.16bn for the same bond maturities.
But, the Central Bank of Nigeria did not conduct any public Open Market Operations (OMO) bills auctions during the reviewed period.
The average coupon rates for FGN bonds experienced a decline in July 2023. The rates for the 10-year, 15-year, and 30-year segments dropped to 13.05 per cent, 14.10 per cent, and 14.30 per cent, respectively.
In contrast to June 2023, no corporate bonds were listed on the FMDQ Exchange in July.
The previous month had witnessed the listing of corporate bonds worth N17.50bn.
Despite the absence of new corporate bond listings, the total outstanding value for corporate bonds remained steady at N1.76tn during the review period.
The DMO’s success in T-bills and FGN bonds sales reflects investor confidence in Nigeria’s debt market, as evidenced by the oversubscription of the offered bond amounts.
The increase in T-bills sales indicates a growing demand for short-term government securities, which are considered relatively safe investments.
In a related development, the decline in FGN bond coupon rates suggests a favourable borrowing environment for the Nigerian government, as lower rates reduce the cost of servicing the country’s debt.
The absence of public OMO bills auctions conducted by the Central Bank of Nigeria may indicate a shift in monetary policy or a strategic decision to manage liquidity in the market.
The lack of new corporate bond listings in July may be attributed to market dynamics or companies’ preference for alternative financing options.
Despite the temporary slowdown in corporate bond listings, the steady outstanding value indicates the continued importance of corporate bonds as a financing tool for Nigerian businesses.
Nevertheless, the growth in T-bills and FGN bonds sales, coupled with the stability of the corporate bond market, showcases the resilience and attractiveness of Nigeria’s debt market to both domestic and international investors.