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DMO Opens March Savings Bond Offer

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The Debt Management Office (DMO) has opened the offer for subscription of the two and three years Federal Government Savings Bond for the month of March 2018 at yields slightly higher than the rate it sold the bond in February.

According to the offer document, the debt office plans to raise the two year March 14, 2020 paper at 10.746 per cent and the three year March 14, 2021 paper at 11.746 per cent as against 10.277 and 11.277 per cents at which it raised the papers in February.

The DMO is yet to publish the details of the February Savings bond auction. The yields offered in February is lower than 12.098 per cent and 13.098 per cent which it paid on the two and three year Savings Bond at the January auction.

The debt office in January raised N196.3 million through the Savings Bond which targets low income earners. It raised N73.05 million through the two year paper and N123.25 million through the three year paper.

Last year, the DMO had raised N7.3 billion through the savings bond in 2017 as investor appetite for the bond diminished in the fourth quarter of the year. Figures showed that in December, 2017, N246.41 million was raised, the lowest figure for the year.

According to the DMO data, the coupon rate allocated were 11.738 per cent for the two-year bond and 12.738 per cent for the three year bond. For November allotment, the figures shows that N256 million has been raised through the 12.091 per cent two-year bond and 13.091 per cent three-year bond.

In October, the saving bond allotment dropped by 5.6 per cent to N389.19 million raised from the two and three year papers at 12.059 and 13.059 per cents respectively. Investors’ participation had suffered a decline in the last quarter of the year.

The DMO data showed that the initial auction of the FGN Savings Bond had the largest participation in the first quarter and started dropping in the second and third quarters. At the first auction in March, the debt office had raised N2.068 billion from the 13.01 per cent two year debt. By the April auction, it offered a three year debt with the yield on the two year paper lower than the previous auction.

It had raised N1.288 billion through the 12.794 per cent two year paper and 13.794 three year paper. In May it raised N791.15 billion with yields rising to 13.189 per cent for the two year paper and 14.189 per cent for the three year paper.

The yield remained the same in June but the amount raised dropped to N607.26 million. However an increased yield failed to spike interest in July as only N400.57 million was raised from the two and three year paper although the yield for the papers were raised to 13.386 and 14.836 per cents respectively.

By August, investors’ interest in the savings bond increased along with the yield offered. The two year bond was offered at 13.535 per cent while the three year bond was offered at 14.535 per cent and the debt office was able to raise N738.14 million through the Savings Bond.

At the auction held in September, the DMO had raised N412.7 million from both the 13.817 per cent two year paper and the 14.817 per cent three year paper. The DMO had made its first payment on the Savings Bond paying out N67.813 million.

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