FG raises N243.78 billion local currency bonds

Bond yields below inflation rate of 16.01%

Ayotunde Johnston | Thursday, 28 September 2017 10:34am | markets

Patience Oniha | source: dmo.gov.ng

The Debt Management Office (DMO) disclosed on Wednesday that the Federal Government raised N243.78 billion in local currency bonds for its September auction.

The government raised a N35.26 billion bond maturing in July 2021 at 15.99 percent compared with 16.9 percent at its last sale in August. It also issued a 2027 bond, fetching N76.93 billion at 15.9 percent as against 16.8 percent last month, and sold the 2037 note for N131.59 billion at 15.92 percent compared with 16.9 percent in August. The N243.78 billion raised on the bonds is more than the initial target of N135 billion revealed by the DMO last week.

With yields ranging from 15.92 percent to 15.99 percent, it falls slightly below the country’s current inflation level of 16.01 percent. Similarly, yields were lower this month than the last auction held in August.

Despite lower yields, subscriptions of N394.85 billion were received for the bonds at the auction, with N50.28 billion, N127.60 billion and N216.97 billion allocated to bonds maturing on July 2021, March 2027 and April 2037 respectively.

The government issues domestic bonds monthly to raise funds to finance a N2.36 trillion budget deficit which it plans to finance through local and external borrowings. Since January, the government has raised N1.255 trillion through the monthly issuance of local currency bonds according to bond auction results available on the DMO website.