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Banks, PFAs invested N2.96tn in FG bonds in 10 months – Report

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Deposit Money Banks, Pension Fund Administrators and other investors committed about N2.96tn to Federal Government bonds between January and October 2021, according to an analysis of the FGN Bond Auction results available on the website of the Debt Management Office.

Bond oversubscription hit N1.46tn within the period under review, indicating the investors’ strong appetite for FGN bonds.

An analysis of the breakdown for each month showed that Federal Government bonds for January worth N150bn were oversubscribed by N88.28bn.

 The total subscription received from investors for the bonds was N238.28bn, comprising N91.84bn for the 16.2884 per cent FGN March 2027 bonds; N106.37bn for the 12.5 per cent FGN March 2035 bonds; and N40.07bn for the 9.8 per cent FGN July 2045 bonds.

The auction result added that out of the 125, 99 and 77 total bids for the tenures, 73, 44 and 28 bids were successful.

The Federal Government bonds for February worth N150bn were also oversubscribed by N39.51bn. The total subscription received from investors for the bonds was N189.51bn, comprising N77.05bn for the  16.2884 per cent FGN March 2027 bonds; N72.33bn for the 12.5 per cent FGN March 2035 bonds; and N40.13bn for the 9.8 per cent GFN July 2045 bonds.

The auction result added that out of the 78, 53 and 60 total bids for the tenures, 31, 20 and 30 bids were successful.

The Federal Government bonds for March worth N150bn were equally oversubscribed by N183.48bn. The total subscription received from investors for the bonds was N333.48bn comprising N65.25bn for the 16.2884 per cent FGN March 2027 bonds; N110.19bn for the 12.5 per cent FGN March 2035 bonds; and N158.04bn for the 9.8 per cent FGN July 2045 bonds.

The auction result added that out of 82, 125 and 215 total bids submitted for the tenures, 48, 88 and 176 were successful.

The Federal Government bonds for April worth N150 were oversubscribed by N115.66bn. The total subscription received from the investors for the bonds was N265.66bn, with the shortest tenor undersubscribed.

A total of N34.69bn subscription was received for the 16.28884 per cent FGN April 2027 bonds; N56.13bn for the 12.5 per cent FGN March 2035 bond; and N174.86bn for the 9.8 per cent FGN July 2045 bond which recorded the highest subscription.

The auction result added that out of 50, 75 and 184 bids for the tenures, 23, 43 and 91 were successful.

The Federal Governments bonds for May worth N150 were oversubscribed by N131.97bn. The total subscription received from the investors for the bonds was N281.97bn. A total of N37.24bn subscription was received for the 16.2884 per cent FGN March 2027 bonds; N57.35bn for the 12.50 per cent FGN March 2035 bond; and N187.38bn for the 14.80 per cent FGN April 2049 bond. The auction result added that out of 53, 89 and 171 bids for the tenures, 32, 65 and 102 were successful.

The Federal Government’s bonds for June worth N150 were oversubscribed by N267.48bn. The total subscription received from the investors for the bonds was N417.48bn. A total of N66.21bn subscription was received for the 16.2884 per cent FGN March 2027 bonds; N127.45bn for the 12.50 per cent FGN March 2035 bond; and N223.82bn for the 12.98 per cent FGN March 2050 bond. The auction result added that out of 79, 138 and 197 bids for the tenures, 61, 111 and 140 were successful.

The Federal Government bonds worth N150bn for July were oversubscribed by N136.11bn. The total subscription received from investors for the bonds was N286.11bn, comprising N56.41bn for the 13.98 per cent FGN February 2028 bonds, N73.44bn for the 12.4 per cent FGN March 2036 bonds, and N156.26bn for the 12.98 per cent FGN March 2050 bonds. The auction result showed that out of 57, 119 and 156 total bids for the tenures, 19, 77 and 59 were successful.

The Federal Government bonds worth N150bn for August were oversubscribed by N210.02bn. The total subscription received from investors for the bonds was N360.02bn, comprising N77.69bn for the 13.98 per cent FGN February 2028 bonds, N104.95bn for the 12.40 per cent FGN March 2036 bonds, and N177.38bn for the 12.98 per cent FGN March 2050 bonds. The auction result showed that out of 83, 138 and 186 total bids for the tenures, 54, 126 and 125 were successful.

The Federal Government bonds worth N150bn for September were oversubscribed by N184.32bn. The total subscription received from investors for the bonds was N334.32bn, comprising N52.43bn for the 13.98 per cent FGN February 2028 bonds, N125.58bn for the 12.40 per cent FGN March 2036 bonds, and N156.31bn for the 12.98 per cent FGN March 2050 bonds. The auction result showed that out of 65, 144 and 121 total bids for the tenures, 48, 127 and 95 were successful.

The Federal Government bonds worth N150bn for October were oversubscribed by N100.71bn. The total subscription received from investors for the bonds was N250.71bn, comprising N49.05bn for the 12.50 per cent FGN January 2026 bonds, N80.92bn for the 16.2499 per cent FGN April 2037 bonds, and N120.74bn for the 12.98 per cent FGN March 2050 bonds. The auction result showed that out of 44, 96 and 79 total bids for the tenures, 36, 61 and 54 were successful.

A recent report by the International Monetary Fund stated that Nigeria, Egypt, and Ghana had the highest weight at the emerging bond market index.

An investment analyst at Afrinvest, Temitope Omosuyi, spoke on the possible reasons for investors’ interest in the Nigerian bond market.

He said, “Nigerian bonds have attracted significant interest in recent times. For instance, the Nigeria Eurobond issuances recorded significant success due to the acceptable risk profile of the country’s fiscal policy.

“Even though the fiscal deficit has widened substantially, the rally in oil prices, as well as over $3bn in inflows from special drawing rights into the foreign reserves, has improved investors’ interest in Nigeria’s debt issuance.

He added, “The near-term relative stability in the FX market could be traced to this positive news, and a bullish oil market portends that Nigeria’s bonds will remain very competitive going forward.”

“Nonetheless, the government must strategically optimise the cost of debt in the low-interest rate environment on the back of huge global system liquidity that seeks attractive investment destinations.”

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