FGN Bonds: DMO to raise N235bn in fourth quarter

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firstbank_logo_vertical_copyBarring any unforeseen circumstance, the Debt Management Office (DMO) has disclosed that it plans to raise about N235 billion ($1.47 billion) from the sale of FGN bonds by the end of the fourth quarter (Q4 2013). The DMO, in its bonds issuance calendar, said it intends to collect another N80 billion from the sale of global depository notes (Euro-clearable instruments backed by underlying FGN bonds) to external investors in Q4. The agency had indicated that the calendar for this quarter would be adjusted for the issue of the notes. A review of the DMO’s Q3 calendar showed that there is a shortfall of about N15 billion in the N235 billion it wants to raise in Q4, when compared with the N250 billion in the calendar for Q3. A further review of the DMO’s activity in the bond market showed that it has raised N704 billion (gross) from the auction of bonds in the first nine months of 2013. The total bid has averaged N160 billion over the past year; an indication of investors’ confidence in the bond market. The one problematic auction came in June this year when the DMO offered N85 billion and raised just N21 billion. Tapering concerns had pushed up a majority of bids. Meanwhile, the calendar for Q4 is divided between the reopening of two issues, the 13.05 per cent Aug ‘16s and the 10.00 per cent Jul ‘30s (Nigeria’s long bond). Analysts believe the DMO should be able to achieve its programme in comfort given the level of consistency in the bond market in recent years. “This is because yields on the more liquid bonds have narrowed by about 400bps since the JP Morgan announcement in August. The exchange-rate policy and the inflation story are buy-signals in our view in addition to the index inclusion, and we see further compression of about 200bps in 2013. “We do not see a clear direction for yields, which may well continue to move within their range of 13 per cent to 14 per cent of the past three months. A correlation with inflation is not what anybody can predict at the moment, “said analysts at FBN Capital. Thisday

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Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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