Investors Shun Nigeria’s Domestic Bonds Over Rising Inflation, Aggressive Rate Hikes


The Debt Management Office (DMO) says the country’s October bond issuance valued at N225 billion ended with a subscription level of N119.17 billion as inflation and monetary policy’s aggressive moves pished back investors.

This is an under-subscription of 52.89 percent or N105 billion.

The debt office disclosed this in the recently-released circular for the Federal Government of Nigeria (FGN) bond result.

According to the circular, the auction had a settlement date of October 19

Also, the issuances have a maturity date of March 23, 2025, April 27, 2032, and April 18, 2037, respectively.

DMO also said the auction has a term-to-maturity period of six years, six months; nine years, six months and 14 years, six months, respectively.

Investors Shun Nigeria’s Domestic Bonds Over Rising Inflation, Aggressive Rate Hikes

According to DMO, it offered a reopened 10-year bond at 14.55 percent, a reopened 10-year bond at 12.50 percent and a reopened 20-year bond at 16.25 percent.

It said the auction concluded with 71 successful bids out of the 84 bids received.

The agency said it offered three tranches of FGN bonds at N225 million — N75 billion each.

It added that the total subscription received from investors was N119.17 billion, with only one of the bonds oversubscribed.

It further said the amount allotted to investors culminated in N3.13 billion, N11.90 billion and N92.85 billion for the first, second and third bond offers, respectively — totalling N107.9 billion.

Also, DMO noted that the bids received for the 10-year bond ranged from 13 percent to 17.5 percent, 14.2 percent to 18.5 percent for the 10-year period and from 14.7 percent to 19 percent for the 20-year bond.

“Successful bids for the 14.55% FGN APR 2029 (Re-opening, 10-Year Bond), 12.50% FGN APR 2032 (Re-opening, 10-Year Bond) and 16.2499 % FGN APR 2037(Re-opening, 20-Year Bond) were allotted at the Marginal Rates of 14.5000%, 15.0000 % and 16.0000 %, respectively,” DMO said.

“However, the original coupon rates of 14.55% for the 14.55% FGN APR 2029, 12.5000% for the 12.5000% FGN APR 2032 and 16.2499% for the 16.2499% FGN APR 2037 will be maintained.”

Source: The Cable