Business
FG Raise N4tn Bonds In 6 Months
A monthly report by the Exchange Financial Markets for 2024 has indicated that the Federal Government raised about N4.13tn from bonds in the first half of 2024.
The value of new issuance of FBN bonds for June, which was N297.01bn, was the lowest in six months and the highest was N1.49tn in February.
In January, the value of FGN bonds issued was N418.20bn, N608.86bn in March, N628.81bn in April and rose to N682.07bn in May.
At the end of June 2024, the value of outstanding FGN bonds, which includes savings and green bonds, stood at N26.22tn, which is about 44.49 per cent higher than at the end of the same period in June 2023 (N18.15tn).
For the February bond issuance, the Debt Management Office said the relatively large amount offered was based on the FGN’s financing need, the opportunity to attract foreign investors, and the premise that some local investors may be able to access pools of funds.
The Federal Government offered a N1.25tn seven-year FGN bond maturing in 2031 and another N1.25tnn 10-year FGN bond maturing in 2034 in February.
It received total bids of N1.9tn, making it the highest it has received in any one FGN Securities Auction and allotted N873.53bn for the seven-year bond and N621.38bn 10-year bond, making a total allotment of N1.49tn.
In the second quarter, there were seven reopened bonds: two in April (FEB 2031 and FEB 2024), two in May (APR 2029 and FEB 2031) and all the bonds issued in June were re-openings (APR 2029, FEB 2031 and MAY 2033, which was issued a month earlier).
As at May, the Debit Management Office (DMO) had an outstanding N1.5tn to raise from the Federal Government’s proposed N6tn bond having already raked in N4.5tn from previous issuances.
The Director General of the DMO, Patience Oniha, at an interactive session with primary dealer market makers in Lagos, noted that domestic securities remained a major source of Federal Government spending.
She said, “Last year, we raised N7tn as new domestic borrowing. It speaks to the size of the domestic market, its resilience, and its sophistication, unlike we have in many African markets.
“Out of the new domestic borrowing of N6tn we have raised N4.5tn. For the Ways and Means, out of N7tn approved for securitisation, we have raised N4.9tn”.
Since the beginning of the year, investors have shown interest in the long-term FGN bond. The report on capital importation for Q1 2024 released by the National Bureau of Statistics (NBS), showed that it rose to the pre-pandemic high, hitting $3.38bn in the first quarter of 2024, on the back of interest rate hikes in Nigeria and rate cuts in advanced economies.