FG plans to boost N120 billion in December bond public sale 

The Federal Authorities of Nigeria, by way of the Debt Administration Workplace (DMO), has introduced plans to boost N120 billion by way of the public sale of two Federal Authorities Bonds.

The public sale, scheduled for December 16, 2024, will supply traders a possibility to subscribe to reopened debt devices, with settlement set for December 18, 2024.

This was the identical quantity provided within the earlier month, which was one of many lowest quantities provided this yr, because the Federal Authorities appeared to decelerate on bond choices.

Breakdown of the December bond public sale  

• The bond providing contains a 19.30 per cent April 2029 bond, a five-year reopening valued at N60 billion, and an 18.50 per cent February 2031 bond, a seven-year reopening additionally valued at N60 billion. Each devices are reopenings of beforehand issued bonds, permitting traders to take part at present market yields.
• Every bond unit is priced at N1,000, with a minimal subscription of N50,001,000 required. Buyers should purchase further items in multiples of N1,000. The yield-to-maturity bid that clears the public sale quantity will decide the ultimate value for profitable bidders, together with any accrued curiosity.
• The bonds pays curiosity semi-annually, offering traders with periodic returns till maturity. Redemption will happen by way of a bullet compensation on the finish of the bonds’ respective phrases, making certain the complete principal quantity is returned to traders.

What it is best to know 

A number of options make these bonds engaging to traders. They qualify for tax exemptions beneath the Firm Revenue Tax Act and the Private Revenue Tax Act, making them significantly interesting to pension funds and different institutional traders. Listed on the Nigerian Alternate Restricted and the FMDQ OTC Securities Alternate, the bonds are tradable property. Additionally they qualify as liquid property for liquidity ratio calculations for banks, enhancing their enchantment to monetary establishments.

• The bonds are totally backed by the Federal Authorities of Nigeria, secured by the nation’s normal property. This assure underscores the security and reliability of the funding for each retail and institutional traders.
• The DMO has inspired traders to contact any of the Main Supplier Market Makers (PDMMs) licensed to facilitate the public sale. These embrace main monetary establishments corresponding to Access Bank, Zenith Bank, Guaranty Trust Bank, and First Bank of Nigeria.
• This bond issuance is a part of the Federal Authorities’s technique to mobilize home funds to finance vital infrastructure tasks and meet budgetary obligations.
• Nairametrics earlier reported that the Federal Authorities raised over N346.155 billion at its November 2024 bond public sale, reflecting increased allotments regardless of a discount within the quantity provided.
• The public sale, carried out by the Debt Administration Workplace (DMO) on November 18, 2024, featured reopenings of the 19.30% FGN APR 2029 (5-Yr Bond) and the 18.50% FGN FEB 2031 (7-Yr Bond).

In comparison with October, the November public sale noticed a 33.33% discount within the whole quantity provided.

The DMO positioned N60 billion on supply for every bond, a drop from N90 billion in October. Regardless of the decrease choices, whole allotments rose considerably, climbing by 19.50% to N346.155 billion from N289.597 billion in October.

For the 5-year Bond, N63.530 billion was allotted, whereas the 7-year Bond recorded an allotment of N282.625 billion. In distinction, the October public sale allotted N57.237 billion and N232.360 billion for the 5-year and 7-Yr Bonds, respectively.

Additionally, investor curiosity far exceeded expectations, with whole bids amounting to N369.585 billion—a 208% subscription fee. This oversubscription highlights the market’s urge for food for fixed-income devices amid evolving macroeconomic situations.