DMO To Raise N1.2trn Through Bonds In 3 Months

The Debt Management Office (DMO) is planning to raise up to N1.2 trillion in debt through re-issuance of federal government bonds even as it spent N1.195 trillion on paying interests on the FGN bonds in the first six months of this year.

The DMO, in its bond issuance calendar for the last quarter of the year, said it plans to raise between N960 billion and N1.2 trillion in three months. The amount is expected to be raised between October, November and December this year.

According to the bond issuance calendar, the funds are to be raised through re-issuance of 10 to 30 year bonds. The debt office plans to re-open the 14.55 per cent FGN APR 2029, 14.70  per cent FGN JUN 2033, 15.45 per cent FGN JUN 2038 and 15.70 per cent FGN JUN 2053.

In the first six months of the year, the federal government through the DMO had spent N1.195 trillion on paying interests on bonds, bringing the total domestic debt service to N1.44 trillion in the six months period.

Total domestic debt stood at N48.34 trillion as at June 30, 2023 with FGN bonds accounting for 86.87 per cent of the total figure. FGN bond obligations as at the first half of this year stood at N41.972 trillion.

According to the latest report from the Debt Management Office (DMO), Nigeria’s total debt servicing expenditure reached N2.34 trillion over a six-month period. In the second quarter of 2023, Nigeria’s spending on debt servicing slowed down, amounting to N849.58 billion. This marked a notable 43.04 per cent decrease from the N1.49 trillion spent on debt servicing in the first quarter of 2023.

DMO data reveals that in the first quarter of 2023, Nigeria allocated N874.13 billion for servicing its domestic debt and $801.36 million (equivalent to N617.35 billion) for servicing external debt, totaling N1.24 trillion.

However, during the second quarter of 2023, Nigeria’s expenses for domestic debt servicing amounted to N565.88 billion, while external debt servicing costs reached $368.26 million (equivalent to N283.7 billion), resulting in a combined total of N1.24 trillion, based on data obtained from the Debt Management Office. The DMO applied an exchange rate of $1 to N770.38 for external debt servicing.

Unlike the previous quarter, when Nigeria allocated approximately $131.13 million for servicing Exim Bank of China loans, there were no funds dedicated to servicing Chinese loans in the first quarter of 2023, as reported by the DMO

Despite the decline in the cost of debt servicing, Nigeria’s public debt continued to rise, reaching N87.38 trillion by the end of the second quarter of 2023. This represents a significant increase of 75.29 per cent or N37.53 trillion compared to the N49.85 trillion reported at the end of March 2023.

DMO attributed this upward trend in debt partly to the inclusion of N22.71 trillion in Ways and Means Advances from the Central Bank of Nigeria to the federal government.