DMO AUCTIONS N350BN FGN FEBRUARY SAVINGS BONDS
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The Debt Management Office has reissued N350bn worth of Federal Government Saving Bonds in February.
The bonds are offered for subscription by auction on Monday, according to the offer circular issued by the DMO on behalf of the Federal Government.
For the January N450bn bonds auction, DMO announced that it successfully raised a total of N669.94bn. Out of the money raised, N606.46bn was allotted across three bond tenors: FGN APR 2029, FGN FEB 2031, and FGN JAN 2035. The January bonds were oversubscribed, with investors showing keen interest across the three tenors offered, with competitive yields reflecting prevailing market conditions.
The latest offer circular indicated that the bonds were reissues: N200bn for the 19.30 per cent FGN APR 2029 and N150bn for the seven-year tenor FGN FEB 2031 with a coupon rate of 18.50 per cent.
The settlement date of the auction is Wednesday. By reopening these bonds, the government provided investors with another opportunity to participate in the bonds.
The amount raised from the bond offering is expected to support the government’s efforts at financing major infrastructure projects while helping to bridge the deficit in the 2025 budget, which the government has said it would fill through both domestic and foreign borrowings.
According to investment house Comercio Partners in its weekly report, the bond auction is expected to take centre stage this week.
In the past week, the FGN Bonds Market traded on a mildly active note at the start of the week. At the onset, trades were consummated on the 29s and 35s at 20.70 per cent and 21.55 per cent, respectively, while the 33s was seen quoted at 20.40/20.20.
However, the bullish sentiments intensified following the MPC meeting and the bond offer circular. The MPC Committee voted to keep all parameters constant while the DMO released the bond offer circular featuring N200bn on the 29th and N150bn on the 31st with the removal of the 35s.
Consequently, we saw trades consummated on the 31st, 34th, and 35th as low as 19.90 per cent, 18.80 per cent and 18.00 per cent, accordingly.
“Week-on-week, the average benchmark yield declined by 66 bps to close at 19.08 per cent,” Comercio Partners said.
Cowry Assets Management research commenting on the bonds market highlighted the bullish trend, “With yields contracting across various maturities amid strong investor confidence. The high-yield environment and expectations of attractive rates at the upcoming FGN Bonds auction fuelled demand, particularly for short- and mid-term instruments. Investors sought to capitalise on positive real returns, driving buying interest in the 2035s, 2027s, 2039s, and JUL-30 bonds. As a result, the average yield declined by 78 basis points to settle at 19.47 per cent.”
Again, analysts predict that investors’ focus will be on the FGN bonds auction this week.
“Looking ahead, we anticipate a relatively positive trajectory in the fixed-income market, with attractive yields sustaining investor participation in the secondary market. However, attention will shift to the Debt Management Office, which plans to offer N350bn at the upcoming FGN Bonds auction. The issuance includes N200bn for the April 2029 maturity and N150bn for the February 2031 maturity,” the analysts said.
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