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FG plans to raise N95bn through bonds

By on March 6, 2015

The Federal Government has disclosed plans to raise N95bn ($476m) by selling bonds with maturities ranging between five and 20 years, the Debt Management Office said on Wednesday.

The debt office said it would raise N35bn in 5-year bonds and N30bn each in the 10 and 20-year bonds, which would be auctioned on Wednesday, March 11.

The settlement date is March 13, the DMO said on its website.

All the bonds are re-openings of previous issues and the result of the auction is expected to be published on March 12.

“For re-openings of previously issued bonds, where the coupon is already set, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument,” the DMO said.

Last month, the Federal Government said it would raise N90bn in bonds with maturities ranging between five and 20 years at its regular auction on February 11.

While the 5-year debt note was a fresh issue, the 10-year and 20-year bonds were re-openings of previously issued paper.

Analysts have said that the yields on fixed-income securities such as bonds and Treasury bills would remain attractive this year as the government is expected to borrow more.

“We expect yields in the fixed income market to remain attractive in 2015. Our position is informed by our expectation of aggressive government borrowing (on account of shrinking revenue) and maintenance of tight monetary stance by the CBN,” said analysts at WSTC Financial Services Limited.

They further said they believed that the tight monetary stance of the CBN aimed at attracting foreign capital in the face of higher country risk premium (a fall out of weak macro fundamentals and heightened political uncertainty) and market reaction to the normalisation of rates in the United States would sustain high yields in fixed income securities.

 

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