Debt Stock Rises As DMO Raises Fresh N588bn From Bonds

The Debt Management Office (DMO) said it raised N588.85 billion from the March 2024 Federal Government (FGN) Bond offer which it opened last week, slightly more than the N450 billion which it had planned to raise.

the latest borrowing the federal borrowing has further increased Nigeria’s debt profile as the government continues to depend on debts to fund its operations.

The March offer was much less than N2.5 trillion which it had set out to raise last month and N1.49 trillion which it eventually raised in the February offer. The bond auction results released by the debt office showed that the longer tenored bond had interested investors more.

The DMO had planned to raise N150 billion through a new 3-year FGN MAR 2027 bond and N150 billion each from the re-issuance of the 18.50 per cent FGN FEB 2031 7-year paper and 19.00% FGN FEB 2034 10-year paper.

According to the auction results, of the N298.6 billion subscription on the 19.00 per cent FGN FEB 2034 10-year paper, the DMO had allotted N275.85 billion asides a non competitive allotment of N113.2 billion at a stop rate of 20.45 per cent with bids ranging from 17.5 to 25 per cent.

It had also raised N151.928 billion from the new issue of 3-year FGN MAR 2027 bond at a stop rate of 19.94 per cent with bids ranging from 17 per cent to 25 per cent. Also it raised N47.886 billion from the 18.50 per cent FGN FEB 2031 7-year paper at a stop rate of 20 per cent.

In February, the debt office had raised two new bonds hoping to raise N1.25 trillion each from FGN FEB 2031 7-Year and FGN FEB 2034 10-Year bonds. It could however only raise around half of its intended sale of N2.5 trillion in seven and 10-year bonds as the low interest rates on offer curbed investor appetite.

The two bonds were subscribed to the tune of N1.49 trillion with the seven-year tenor bond raking in N873.5 billion, 69.6 percent of the amount offered while the 10-year bond got N621.38 billion, 49.6 percent of the total offer.

The rates on the bond offers are however less than the 22.75 per cent benchmark interest rate and 29.9 per cent inflation rate in the country.