Nigerian federal government is obviously riding on the back of current excess liquidity in the market to secure better, lower yields for its bonds as investor appetite soars.
Report from the Debt Management Office (DMO) on February 2020 bonds auctioned Wednesday indicate a significant oversubscription as investors continue to explore profitable outlets to push in their cash.
Lower money market interest rates continue to reflect liquidity overhang in the banking system, resulting from the restriction of individuals and non-bank corporates in the domestic economy from participating in OMO bill auctions.
At the Wednesday auction, DMO offered N140.00 Billion across three Instruments to investors, including 5-Year tenor bonds worth N45.00 billion; 10-Year tenor of N45.00 billion as well as 30-Year tenor, worth N50.00 billion.
“Subscriptions received through Competitive Bids for the three instruments was N398.20 billion, indicating a total subscription level of 284.43%,” the DMO said in a mailed note.
Non-Competitive bid of N60 billion was also received, making the total subscriptions from Competitive and Non-competitive bid to N458.20 billion.
For Competitive bid, some N78.43 billion or 174.30 percent subscription was received for the 5-year Bond; N95.70 billion or 212.67% for the 10-year Bond; and N224.07 billion or 223.15% for the 30-year Bond.
Successful bids were allotted at the rate of 8.7500% for the 5-Year, 10.7000% for the 10-Year and 12.15% for the 30-Year Bond, which indicate a decline from the allotment rates of 9.8500%, 11.1250% and 12.5600% for the 5-Year, 10-Year and 30-Year Bonds, respectively, at the January 2020 FGN Bond Auction.
The total amount allotted for Competitive Bids was N100.00 billion across the three (3) tenors, while N60.00 Billion was allotted through Non-Competitive Bid for the 5-year and 10-year tenors, at same rates with the Competitive Bids.
This brought total allotment from Competitive and Non-Competitive bids to N160.00 billion, the debt office noted.
Onyinye Nwachukwu, Abuja