The Debt Management Office’s (DMO) new 60/40 per cent debt mix with a higher level of foreign debt stock will ensure the government’s financing needs at minimum cost, as well as optimal portfolio mix and balance in a cost-risk trade-off, Abraham Nwankwo, the agency’s director-general has said.
Also, the long-awaited inflation-linked bonds will finally be issued this year to meet up with some portions of the N577 billion domestic borrowing to finance the budget deficit.
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Securities lending and bond switches are other instruments being considered alongside the inflation-linked bond before the end of the year, in a renewed effort at strengthening the bond market by DMO.
“It will further strengthen and deepen the FGN Bond market for enhanced liquidity through the continued issuance of benchmark bonds and introduction of other varieties of debt instruments such as securities lending, bond switches and inflation-linked bonds into the domestic bond market,” Nwankwo said.
In the 2012 – 2015 medium term strategy plan recently approved by the Federal Executive Council (FEC), DMO changed the ratio from 87/13 to the new mix of 60/40, thereby reducing the percentage of domestic borrowing in favour of foreign debt.
