• Thursday, October 03, 2024
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DMO douses concerns over delayed coupon payment on savings bond

Debt Management Office (DMO)

The Debt Management Office (DMO) said on Friday that the current delays in coupon payments on the June savings bond auction is as a result of system and processing issues and not a pointer to a government’s financial crisis as being feared.

“The delay in the coupon payment is a system process issue that is being addressed. “All hands are on deck to resolve the issue,” Patience Oniha, DG DMO told BusinessDay.

The government has failed to make the first coupon payment on a two-year and three-year debt issue raised in June for 4.2 billion naira. This marks the second consecutive delay in paying obligations on a savings bond, according to investors.

“I write to Enquire about non-payment of bond coupons. I did subscribe for the 17.414 per cent June 12th- 2026 FGN saving bond On 5th June 2024, the first quarterly coupon was due for September 12th 2024, until date I am yet to receive this payment,” an investor complained on the DMO Twitter page.

Another Okechukwu Elechi said, “ Please clarify why the first coupon for the June 2024 FGN Savings Bond due on 12th September 2024 hasn’t been paid. Thanks.”

However, there are concerns that the issue is beyond the system process issue rather than the government’s rising debt burden as there was a similar delay (a week) in August.

“Once is understandable. Twice is emblematic of an incipient issue,” a Lagos-based investment analyst said.

But responding to this analyst’s position, Oniha further told BusinessDay, “No. We certainly could do better. But it’s a system process issue, and this is valid.”

Nigeria’s total debt stock in the first quarter (H1) of 2024 rose to N121.67 trillion, from N97.34 trillion as of December 2023, according to data from the Debt Management Office (DMO).

Godwin Obaseki, Edo State Governor, Godwin Obaseki, had just yesterday said Nigeria was technically bankrupt, and neither had nor earned enough to offset its expenditure, while government spending continues to increase.

Also responding to the concerns, Bayo Onanuga, Special Adviser to President Tinubu (Information and Strategy) said Bloomberg’s recent report titled “Nigeria Says ‘System Issues’ Delaying Coupon Payment on Savings Bond” was inaccurate.

Quoting Wale Edun, Finance Minister and Coordinating Minister of the Economy, Onanuga explained that
Nigeria currently owes no outstanding payments and has “sufficient liquidity to meet all its financial obligations, and there is no default or delay in servicing our debts.”

“Additionally, the Director General of the Debt Management Office, Ms. Patience Oniha, confirmed that, as of September 19, the Central Bank of Nigeria has successfully processed all due payments.

“The payment scheduled for today, September 20, is also being processed on time.

“Any suggestion of systemic financial issues causing delays in bond payments is unfounded,” he added.

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