Three months on, investors continue to oversubscribe FGN Bonds

The FGN Bonds that were offered to investors for the month of March was oversubscribed by N140 billion, according to the Debt Management Office (DMO).

The DMO disclosed that though the initial offer was N100 billion bonds, the total subscription received was N240.6bn.

Oversubscription in previous months: DMO had also recorded over-subscription of the FGN bonds in January and February 2019. According to information contained on the agency’s website, the initial value of the January bond was N150 billion, even though investors over-subscribed by N197 billion.

While in February, FGN bonds for the month was worth N150bn, but the total bids received from investors for the bonds was N234bn.

March report on FGN bonds

In March, another over-subscription has been recorded, indicating an increasing interest in the Federal Government’s bonds. Nairametrics recently reported about a lady on Twitter who narrated how subscribing to the Federal Government of Nigeria Bond helps her to saveenough money for her house rent each year.

According to report, at the auction, DMO offered three instruments at the auction for three, seven, and ten years, and subscriptions for the three instruments was in excess of N148bn for competitive bids, while offers for Non-competitive bids were valued at N92.6bn.

“THE FGN BOND AUCTION FOR MARCH 2019 CONDUCTED ON WEDNESDAY AT WHICH N100BN BONDS WERE OFFERED WAS OVERSUBSCRIBED JUST AS IN THE AUCTIONS FOR JANUARY AND FEBRUARY.

“WE OFFERED THREE INSTRUMENTS AT THE AUCTION FOR THREE, SEVEN AND 10-YEAR TENORS AND SUBSCRIPTIONS FOR THE THREE INSTRUMENTS WAS IN EXCESS OF N148BN FOR COMPETITIVE BIDS. NON-COMPETITIVE BIDS VALUED AT N92.6BN WERE ALSO RECEIVED, TAKING THE TOTAL SUBSCRIPTIONS ACROSS THE THREE TENORS TO OVER N240.6BN.

“THE TREND OF INVESTORS’ PREFERENCE FOR THE LONGER TENURED INSTRUMENT CONTINUED, WITH THE 10-YEAR BOND SIGNIFICANTLY OVERSUBSCRIBED WITH A BID-TO-COVER RATIO ABOVE FIVE.

“ALLOTMENTS WERE MADE TO SUCCESSFUL BIDDERS AT THE RATES OF 13.5 PER CENT FOR THE FIVE-YEAR, 13.5 PER CENT FOR THE SEVEN-YEAR AND 13.5 PER CENT FOR THE 10-YEAR BONDS, WHICH ARE CONSIDERABLY LOWER THAN THE ALLOTMENT RATES FOR THE FEBRUARY 2019 AUCTION.”

It was revealed that the total amount allotted to both competitive and non-competitive bids for the three instruments was N121.95bn.

Source: Nairametrics

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