DMO banks on market makers’ bigger appetite for N6trn bond

Buoyed by investors’ sustained appetite, the Debt Management Office (DMO) has, again, sought the support of primary dealer market makers (PDMM) to raise more financing for Nigeria’s domestic debt plan.

The DMO has an outstanding N1.5 trillion to raise from the Federal Government’s proposed N6 trillion bond having already raked in N4.5 trillion from previous issuances.

Patience Oniha, the director-general of the Debt Management Office (DMO), who led a team from the debt office for a meeting with the primary dealer market makers in Lagos on Monday, noted that the DMO had raised part of the finance for both the domestic debt and ways and means borrowing, which they intended to complete.

“We had a meeting earlier in the year where we talked about the DMO’s borrowing plan, which is the FGN’s borrowing plan, and we told you what we were doing from the budget because that’s the principal document for refinancing.

“Then, we discussed the ways and means borrowing and how to put that in order. At that time, the budget had N6 trillion of domestic borrowing, new borrowing, not refinancing. And then the ways and means at that time, there was N7.3 trillion that the National Assembly approved for securitisation,” she said.

“We’re happy that with your support for the new domestic borrowing in the 2024 budget, which was N6 trillion, we raised N4.5 trillion. So it’s not our money, you gave us money and we’d like to thank you.”

“For the ways and means, out of that N7.3 trillion that the National Assembly approved for securitisation, we have raised N4.905 trillion. So, there’s still a balance in both cases, but let’s see how the rest of the year goes,” Oniha stated.

At the April bond auction, the DMO offered N450 billion across three bonds: the April 2029 bond (Reopening, 5-year), the February 2031 bond (Reopening, 7-year), and the May 2033 bond (New, 9-year reopening).

“Although subscriptions totalled N551.33 billion, this was relatively low compared to previous months but still 22.52 percent higher than the offer. The subscription distribution was N100.57 billion for the 2029 bond, N76.88 billion for the 2031 bond, and N373.88 billion for the 2033 bond.

“Ultimately, the DMO sold N380.77 billion, 15.38 percent less than the total subscriptions. The stop rates decreased to 19.29 percent, 19.74 percent, and 19.89 percen, compared to 19.30 percent, 19.75 percent, and 20 percent in the previous auction,” Futureview Research analysts said in their May 20 note to investors.

Also at the meeting, Nadia Zakari, president of Financial Market Dealers Association, stated that their interactions with the DMO have been critical in making decisions that shape the country in the long term.

“As market operators, we act as financial intermediaries who interact with other market operators, investors, and their clients. I think it’s because of the size and importance of these interactive sections, that our business environment is ever-evolving, and constantly changing.”

“These constant engagements are crucial as some of the interactions we’ve had as highlighted by the director-general have been critical in making decisions as we strategically plan for the rest of the year,” she stated.

United Capital research analysts said in their May 20 note, “This week, we expect mixed interest in FGN Bonds. The overall direction of the market will be dependent on the outcome of the MPC meeting”.