Subscribe to FG bonds with competitive interest rates for Dec. 2023 — DMO invites investors
…Auctions N406.10bn worth of T-bills in July
By Sodiq Adelakun
The Debt Management Office (DMO) has announced the subscription process for two-year and three-year Federal Government of Nigeria bonds for December 2023.
The bonds will have an interest rate of 12.287 percent and 13.287 percent respectively and will mature on March 13th, 2024. The subscription period will last for 5 days, from December 4th to December 8th, 2023.
The DMO made the announcement on its official website..
The statement read, “Under the Debt Management Office (Establishment) Act 2003 and the Local Loans (Registered Stock and Securities) Act, CAP. L17, LFN 2004 DEBT MANAGEMENT OFFICE on behalf of the FEDERAL GOVERNMENT OF NIGERIA Offers for Subscription and is authorized to receive applications for the Federal Government of Nigeria saving bonds.”
The interest rate for the two-year bonds stands at 12.287 percent per annum, while the three-year bonds offer an interest rate of 13.287 percent per annum.
The statement also specifies the settlement date for both bond offerings as December 13th, 2023, with coupon payments scheduled for March 13, June 13, September 13, and December 13.
These bonds will accrue interest payments every quarter.
The DMO outlines the units of subscription as “N1,000 per unit, subject to a minimum subscription of N5,000, and subsequent multiples of N1,000, with a maximum subscription limit of N50,000,000.”
Potential investors are advised to reach out to stock brokerage firms authorised by the Debt Management Office (DMO) to inquire about FGN bonds.
These bonds can be traded on the NGX (Nigerian Exchange Group). It is crucial to understand that FGN bonds are completely supported by the federal government of Nigeria.
…Auctions N406.10bn worth of T-bills in July
Also, DMO has announced that it sold Treasury bills (T-bills) valued at N406.10 billion in its auctions in July 2023. This information was revealed in the FMDQ Markets Monthly Report for July.
The amount sold represents a 0.39 percent increase (N1.59 billion) compared to the previous month of June 2023, when T-bills worth N404.51 billion were sold.
In addition, the DMO reopened two 10-year, one 15-year, and one 30-year Federal Government of Nigeria (FGN) Bonds, totaling N657.84 billion in July 2023.
The report highlighted that the total sale of these bonds was oversubscribed by 182.73 percent and represented a 39.03 percent increase (N184.68 billion) compared to the amount sold in June 2023 (N473.16 billion) for the same bond maturities.
The report also mentioned that the Central Bank of Nigeria (CBN) did not conduct any public Open Market Operations (OMO) Bills auctions in July 2023.
Furthermore, the FMDQ report revealed that no corporate bonds were listed on the FMDQ Exchange in July 2023, in contrast to the N17.50 billion worth of corporate bonds listed in June 2023.
According to the report, there were no corporate bonds listed on the FMDQ Exchange in July 2023 compared to N17.50 billion worth of corporate bonds listed in June 2023.
“As a result, the total outstanding value for corporate bonds remained unchanged at N1,757.95 billion in the review month,” it said.
The report stated that the total value of Commercial Papers (CPs) quoted on the FMDQ Exchange in July 2023 was N117.32 billion, representing a MoM increase of 42.85 percent (N35.19 billion) from the value of CPs quoted in June 2023.
“Quoted CPs were issued by institutions from various sectors including Financial Services (5), Manufacturing (4), Real Estate (3), Agriculture (2), Chemical Supply & Oil Field Services (2), Commodities Trading (1), Public Sector (1), Telecommunications (1) and Consumer Staples (1)./
“As a result, the total outstanding value of CPs increased MoM by 14.10 percent (N117.32 billion) to N949.26 billion,” it said.
According to the report, secondary market turnover on the FMDQ Exchange in July 2023 was N19.92 trillion, representing a MoM decrease of 8.37 percent (1.82 trillion) and a YoY increase of 0.81 percent (N0.16 trillion) from June 2023 and July 2022 figures, respectively.
It noted that Foreign Exchange (FX), Money Market (MM), and CBN Bills transactions dominated secondary market activity, accounting for 73.98 percent of the total secondary market turnover in July 2023.
“Total spot market turnover for all products traded in the secondary market was N18.47 trillion in July 2023, representing a MoM increase of 3.68 percent (N0.66 trillion) from June 2023 figures./
“The MoM increase in total spot market turnover was driven by an improvement in turnover across MM and FI transactions which increased MoM by 16.35% (N0.90 trillion) and 12.16 percent (N0.91 trillion), respectively, despite the MoM decline in FX transactions by 24.34 percent (N1.16 trillion)./
“The uptick in MM turnover was driven by an increase in Repos/Buybacks, offsetting the MoM decline in Unsecured Placement/Takings transactions. Likewise, the improvement in FI turnover was driven by a MoM increase across all FI products, excluding CBN Special Bills and FGN Bonds which decreased in the review period,” the report noted.
According to the report, “Spot FX market turnover was N3.61 trillion ($4.66 billion) in July 2023, representing a MoM decrease of 24.34 percent (N1.16 trillion) from the turnover recorded in June 2023 (N4.77 trillion).
“In the FX Market, the US Dollar appreciated against the Naira, with the spot exchange rate ($/N) increasing by 22.94 percent ($/N143.60) to close at an average of $/N769.51 in July 2023 from $/N625.90 recorded in June 2023./
“In July 2023, the Nigerian Naira experienced decreased exchange rate volatility, with the currency trading within a range of $/N740.08 – $/N803.90. This was a significant improvement compared to the range of $/N464.67 – $/N770.38 recorded in June 2023.”
The report also highlighted that the turnover in the financial instruments (FI) market reached N8.43 trillion in July 2023, showing a month-on-month increase of 12.16 percent (N0.91 trillion) compared to the turnover of N7.52 trillion in June 2023.
The increase in FI market turnover was primarily driven by significant upticks in turnover across T.Bills, OMO Bills, and Other Bonds, which saw increases of 52.55 percent (N0.94 trillion), 63.75 percent (N0.98 trillion), and 402.37 percent (N0.03 trillion) respectively. These increases offset the decreases in turnover for CBN Special Bills and FGN Bonds, which experienced declines of 57.36 percent (N1.00 trillion) and 1.24 percent (N0.03 trillion) respectively.
