DMO: Nigeria’s February FGN bond auction ‘oversubscribed by over 284%’

The Debt Management Office (DMO) on Wednesday said its auction of the February 2020 FGN Bond was significantly over-subscribed by about 284.43 per cent.

The debt management agency said it offered about N140 billion across three instruments to investors at the auction, namely the 5-Year tenor valued at about N45 billion for a 10-Year tenor: 10 and 30-Year tenor of about N50.00 billion.

The DMO said subscriptions received through competitive bids for the three instruments was about N398.2 billion, or a total subscription level of 284.43 per cent.

Also, non-competitive bids for about N60 billion was also received, making the total subscriptions from competitive and non-competitive bids to about N458.2 billion.

Breakdown
A breakdown of the competitive subscriptions shows that about N78.43 billion, or 174.30 per cent was received from investors for the 5-year bond; about N95.70 billion, or 212.67 per cent for the 10-year bond, and about N224.07 billion, or 223.15 per cent for the 30-year bond.

“Successful bids were allotted at the rate of 8.7500 per cent for the 5-year; 10.7000 per cent for the 10-year, and 12.15 per cent for the 30-year bonds.

“The latest performances indicate a decline from the allotment rates of 9.8500 per cent, 11.1250 per cent and 12.5600 per cent for the 5-year, 10-year and 30-year bonds, respectively, at the January 2020 FGN Bond Auction.

While the total allotment for competitive bids was N100 billion across the three tenors, about N60 billion was allotted through non-competitive bid for the 5-year and 10-year tenors, at same rates with the competitive bids, making the total allotment from the two categories of bids at about N160 billion.

The federal government bond issuance programme has been adopted by the present administration as a strategy to finance the fiscal deficits in a non-inflationary and sustainable manner.

The programme is also used to enhance fiscal discipline of the government and refinance maturing debt obligations of the Federal Government to diversify its financing sources.

Appointment
Meanwhile, the DMO has announced the appointment of CSL Stockbrokers Limited (CSL), a member of FCMB Group Plc, as the new government stockbroker.

CSL will replace Stanbic IBTC Stockbrokers Limited which has served in that capacity prior to the latest appointment.

The CSL’s mandate will include posting Bid and Offer Prices on the Nigeria Stock Exchange (NSE) for Nigerian government’s securities.

CSL was appointed as the government stockbroker on the basis of an open competitive bidding process participated by other stockbrokers.

CSL is expected to build on the achievements already recorded through this programme by increasing the participation of retail investors in all FGN Securities (FGN Bonds, FGN Sukuk, FGN Savings Bond and Green Bonds) listed and trading on the NSE.

The appointment of CSL as the government’s stockbroker is said to be a further demonstration of the commitment of the DMO to the development of the domestic market, promoting liquidity, as well as growing and diversifying the investor base,