N139bn Oversubscription of FG Bonds Recorded This Month– DMO

The Debt Management Office(DMO) in Nigeria has disclosed that bonds issuance of N214.05 billion ended with an oversubscription of N139 billion in January 2022.

It explained that the auction, which closed on January 19, has a settlement date of January 22, 2022.

This was stated in the Federal Government Bond result issued on Wednesday. 

Two tranches of bonds worth N75 billion each were presented by the Debt Management Office.

The first was a reopened 10-year bond at 12.50 percent with a maturity date of January 22, 2026 while the other was a newly-issued 20-year bond at 13.00 percent with a maturity date of January 21, 2042.

“The amount allotted culminated in N81.72 billion and N88.92 billion for the first and second bond offers.

“The bids received for the 10-year bond ranged from 10.80 percent to 13.25 percent, while the 20-year bond ranged from 11 percent to 14.50 percent,” the result said.

The auction also has a maturity period of 4 years and 20 years.

The DMO added that the auction closed with 160 successful bids out of the 254 bids it got. 

It further stated that, “successful bids for the 12.50% FGN JAN 2026 & 13.00% FGN JAN 2042 were allotted at the Marginal Rates of 11.50% and 13.00%, respectively.

“However, the original coupon rates of 12.5000% for the 12.5000% FGN JAN 2026 will be maintained, while the coupon rate for the 13.00% FGN JAN 2042 (New Issue), is set at 13.00%.”

The bonds have no default risk as interest and principal will be paid promptly. Also, the interest gotten from the securities are tax exempt.

The federal government bond is seen as a risk-free debt instrument and the safest of all investments in the domestic debt market as it is fully backed up by the government.

Purchasing FG bonds implies that you are lending to the government for a period of time and returns will be obtained after the stipulated time.