In its sustained efforts to reduce deficit in public finance through debt instruments, the Federal Government will next Wednesday, November 21, auction by way of subscription, N115 billion worth of bonds.
The Debt Management Office (DMO) disclosed this Tuesday through a circular published on its website.
The official information on the proposed bond auction indicated that the five-year bond of N35 billion with April 2023 maturity was being offered at 12.75 percent while the seven-year-bond N35 billion in coupons set to mature in March 2025 will be auctioned at 13.53 percent.
In addition, the circular stated that the 10-year bonds configured in N45 billion coupons with February 2028 maturity date will be auctioned at 13.98 percent.
According to the debt management office, the unit of sale is N1,000 per unit, subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.
The Office disclosed, through the circular, that the bonds were backed by the full faith and credit of the Nigerian government, with interest payable semi-annually to bondholders, while bullet repayment will be made on maturity date.
In recent times, Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund her budget deficit.
The DMO, in its latest report on the 2017 bond market, disclosed that the corporate bond market declined in activity in 2017 relative to 2016, with corporates raising only N21.5 billion in three issues during the year, representing 75 percent drop from the N86.1 billion recorded in 2016.
It stated: “The FGN Bond issuances dominated primary bond market activities as the government continued to issue bonds to finance its budget deficit and refinance maturing obligations among others.
“The Federal Government introduced three new products into the domestic debt market; namely: FGN Savings Bond, Sovereign Sukuk Bond and Green Bond.
“In the corporate bond market, there was a decline in activity relative to 2016, as corporates raised only N21.5 billion in three issues in 2017, representing 75 per cent decline from N86.1billion in 2016.
“In 2017, the FGN shifted its focus by borrowing mainly from the external sources, thereby reducing its participation in the domestic debt market so as to create ample space for the private sector to access credits, and also as part of its debt strategy to reduce its borrowing cost and reduce pressure on investable funds in the domestic market with the aim of depressing borrowing cost.
“Between February and April 2017, the DMO successfully issued Eurobonds for a total of $1.5 billion for a tenor of 15 years in two tranches ($1 billion Eurobond and an additional $500 million Eurobond), under the $4.5 billion Global Medium-Term Note Programme.
“These two Sovereign Eurobonds became the first foreign currency denominated Bonds to be listed at The Nigerian Stock Exchange and the FMDQ OTC Plc.
“In November 2017, $3 billion Eurobonds were also issued: 10-year $1.5 billion and 30-year $1.5 billion. The issuance of the 30-year Note was a landmark achievement as the tenor represents the first by a sub-Saharan African country other than South Africa, and importantly establishes the bases for long-term infrastructure financing, which is the priority of the present government”, DMO added.
This is even as it disclosed that in same the same year, the Federal Government also issued its maiden $300 million Diaspora Bond in the International Capital Market to part-finance the 2017 budget.
The Diaspora Bond, the second to be issued by an African country, after South Africa, and which was registered with the US Securities and Exchange Commission, provided Nigerians resident abroad the opportunity to partner the government in its efforts to stimulate economic growth.
