Despite the guaranteed safety and promising returns on Federal Government’s debt instruments, investor appetite for its May 2026 bonds was unexciting as total subscriptions dropped by 45.6 per cent month-on-month, despite rising yields at the auction.
The Debt Management Office (DMO) in its published data on the debt instruments reported that total market subscriptions dropped to N516.17bn in May from N947.99bn recorded in the preceding month’s auction.
The data reflected that during the May 18 auction, the DMO offered N300bn each for the reopened 22.60 per cent FGN January 2035 bond and the 16.2499 per cent FGN April 2037 bond.
While the 10-year bond attracted subscriptions worth N262.23bn, the 20-year bond recorded N253.94bn in bids.
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According to the DMO, despite weaker demand for the debt instruments in the month under review, the government raised rates at the auction with the 10-year bond cleared at a marginal rate of 17.00 per cent in May compared with the 16.59 per cent recorded on the same tenor in April, while the 20-year paper cleared at 17.04 per cent.
It would be recalled that the April auction recorded subscriptions of N181.94bn for the 5-year bond, N167.04bn for the 7-year paper, and N599.02bn for the 10-year instrument at marginal rates of 16.30 per cent for the 5-year bond, 16.50 per cent for the 7-year instrument, and 16.59 per cent for the 10-year paper.
A further analysis of the DMO’s data indicated that investor demand for the 10-year bond significantly weakened in May as subscriptions for the instrument fell by 56.2 per cent to N262.23bn, from N599.02bn in April.
But then, despite the lower subscriptions for the May bonds, total allotment increased as the DMO allotted N614.51bn in May, more than double the N276.79bn allotted in April, due to a N280bn non-competitive bid on the 20-year bond. The DMO allotted N476.84bn on the 20-year instrument and N137.67bn on the 10-year paper.
The bond auction results revealed that bids for the 10-year bond ranged between 15.00 per cent and 22.60 per cent, while bids for the 20-year paper ranged from 14.00 per cent to 18.49 per cent.
The DMO clarified on the allotments that though successful bids were allotted at marginal rates of 17.00 per cent and 17.04 per cent respectively, the original coupon rates of 22.60 per cent for the January 2035 bond and 16.2499 per cent for the April 2037 bond would be maintained.
