FG raises N225.71bn in July bond auction
By Esther Agbo
The federal government secured N225.714 billion from the July 2024 bond auction, achieving approximately 75 percent of its target amid decreased demand for short-term bonds.
This represents a 24 percent decline compared to the N297.006 billion raised in the June auction.
The government had initially offered N300 billion in three different bond tenors for the auction.
Total subscriptions amounted to N279.664 billion, resulting in an undersubscription of N20.336 billion. Despite this, the total amount allotted to successful bids was N225.714 billion, slightly less than the total subscription received.
The Debt Management Office (DMO) reported strong investor interest in longer-term securities while noting a reduced appetite for shorter-term bonds.
The auction included three re-openings of Federal Government of Nigeria (FGN) bonds: the 5-year 19.30 per cent FGN APR 2029, the 7-year 18.50 per cent FGN FEB 2031, and the 9-year 19.89 per cent FGN MAY 2033.
A total of 186 bids were received, indicating moderate participation and competitive interest.
30 percent FGN APR 2029 (5-Year Bond), The 19.30 percent FGN APR 2029 bond saw modest interest. Of the N100 billion offered, 21 bids were received, with 11 successful bids leading to a subscription of N21.485 billion.
The government allotted N18.885 billion of this bond, with bid rates ranging from 18.5000 per cent to 21.0000 percent and a marginal rate set at 19.8900 per cent.
50 per cent FGN FEB 2031 (7-Year Bond), The 18.50 per cent FGN FEB 2031 bond attracted even less interest. From the N100 billion offered, 16 bids were received, with 9 successful bids resulting in a subscription of N16.530 billion, N6.180 billion was allotted, with bids ranging from 16.0000 per cent to 20.5900 per cent, and a marginal rate of 21.0000 per cent.
89 percent FGN MAY 2033 (9-Year Bond), In contrast, the 19.89 percent FGN MAY 2033 bond drew significant interest.
Although N100 billion was offered, it received 149 bids, with 117 successful bids leading to a substantial subscription of N241.649 billion.
The government allotted N200.649 billion, with bids ranging from 17.5000 per cent to 23.0000 per cent, and a marginal rate of 21.9800 percent.
This strong interest reflects a preference for longer-term securities, likely due to higher returns and perceived stability.
The July 2024 auction results highlight a growing trend toward longer-tenor, high-yield bonds, reflecting investor preference for stable returns in the current economic climate.
The upcoming Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) is expected to further influence interest rates and yields for investors.
