- FGN April Bonds Oversubscribed by 292%
The Federal Government of Nigeria (FGN) April 2018 Bond issued to raise funds to implement the 2018 budget was oversubscribed.
A statement from the Debt Management Office (DMO) said the bond was oversubscribed by 292 per cent.
“Three bonds (5, 7 and 10 years) were offered for a total amount of N90.00 billion. Total subscription was N262.48 billion, a subscription rate of 292 per cent. Each of the bonds was oversubscribed, with demand for the 10-year bond particularly strong at a rate of 534 per cent,” the statement read.
The DMO said it conducted the fourth in the series of FGN Bond Auctions for 2018 on April 25, to raise funds for the implementation of the 2018 Budget. “A total of N90.00 billion was allotted at 12.75 per cent for the five-year bond, 12.85 per cent for the 7-year bond and 12.89 per cent for the 10-year bond,” DMO said, adding that “interest rates at the auction continued to trend downwards, as was the case at the March 2018 auction, and the rates for all the bonds offered at the April Auction were below 13 per cent.”
The drop in rates “is consistent with the DMO’s expectations, based on its redemption of Nigerian Treasury Bills, which started in December 2017.”
The funds injected into the market through the redemptions, and the lower interest rates, are supposed to make credit available to private sector borrowers at lower rates.
This should enable them to lower their cost of operations and be more competitive in pricing.
