DMO to sell N60bn FGN bonds, as external reserves hit $35.47bn

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The Debt Management Office (DMO) will, today, conduct bond auction by offering N60 billion worth of Federal Government of Nigeria (FGN) bonds to investors. This comes as the databank of the Central Bank of Nigeria, CBN, shows further rise in the nation’s external reserves.

According to the revised debt issuance calendar for second quarter released by the DMO last week, the bond action comprises N20 billion worth of 5-year bond, N20 billion worth of 15-Year bond and N20 billion worth of the 30-year bond.

The bond auction is expected to record oversubscription as investors take advantage of the higher returns on FGN bonds compared to the less than 3.5 percent yield on treasury bills. However, the DMO is expected to take advantage of the oversubscription to further reduce stop rates on FGN bonds.

Last month, the N60 billion worth FGN bond offered by the DMO recorded 459 percent oversubscription. The total subscription received through competitive bids for the three instruments was N275.67 billion.

The subscriptions’ breakdown indicated that N49.70 billion or 248.50 percent was received for the 5-year bond; N107.47 billion or 537.35 percent for the 15-year bond and N118.50 billion or 592.25 percent for the 30-year bond.

The successful bids were allotted at the rate of 9.0 percent for the 5-year, 12 percent for the 15-year and 12.5 percent for the 30-year bond, all of which were lower than the rates at the March 2020 FGN bond auction.

External reserves rise to $35.47bn. Meanwhile, the nation’s external reserves rose for the second consecutive weeks to $35.47 billion on Monday. According to the CBN data update, the external reserves rose to $35.47 billion on Monday, May 18th from $34.66 billion on Monday, May 11th, translating to a week-on-week increase of $810 million.

Consequently, the reserves had risen by $2.04 billion since April 29th when the ten months downward trend halted at $33.427 billion.

The improved fortune of the nation’s external reserves was prompted by the inflow of $3.4 billion courtesy of the Rapid Financing Instrument (RFI) facility granted to Nigeria by the International Monetary Fund (IMF) last month.

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