Investors shun Nigerian govt’s May bond auction, subscription drops to N380bn

Subscription to the Federal Government’s bond auction fell to N380.769 billion this month.

This was N246.04 billion or 39% lower than the N626.813 billion raised by the federal government in its April 2024 bond auction.

The subscription in May 2024 was the lowest level of investor participation in government bonds for the year, a decline likely due to the anticipatory stance of investors ahead of key monetary policy decisions.

However, the Debt Management Office (DMO) also recorded a non-competitive allotment of N301.300 billion.

This suggested continued interest from certain institutional investors, despite the broader market’s reticence.

This component of the auction highlights the ongoing reliance on guaranteed buyers, which somewhat cushions the impact of reduced competitive bidding.

The auction involved the issuance of three bonds with varying maturities, highlighting an assertive strategy to secure long-term funding under competitive yields.

At the forefront of the auction was the new nine-year bond, the 19.89% FGN MAY 2033, which garnered N373.875 billion in subscriptions.

N285.124 billion was allotted out of this, including N179.000 billion under non-competitive bids.

The bond, which debuted in this auction, attracted bids ranging from 16.9500% to 22.0000%, eventually settling at a marginal rate of 19.89%.

The seven-year bond, 18.50% FGN FEB 2031, also reopened, pulling in N76.875 billion worth of bids of which N62.975 billion was allotted.

This included N85.800 billion in non-competitive allotments.

The range of bids for this tenor spanned from 17.2000% to 20.8000%, with a final marginal rate of 19.74%.

Completing the trio was the five-year 19.30% FGN APR 2029 bond, reissued with bids amounting to N100.566 billion and an allotment of N32.670 billion.

An additional N36.500 billion was allocated through non-competitive bids. The bids for this bond were within the range of 17.5000% to 21.0000%, and the marginal rate was pegged at 19.29%.

By: Babajide Okeowo

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