The Federal Government’s sovereign bonds auction with four tenors conducted on Monday, March 20, recorded N807.9 billion subscription, representing about 124% higher than the projected subscription value.
The bonds offer were the 13.98% FGN FEB 2028 (10-year tenor), 12.50% FGN APR 2032 (10-year tenor), 16.2499% FGN APR 2037 (20-year tenor) and the 14.80% FGN APR 2049 (30-year tenor with cumulative value of N360 billion. The bonds were sold at varying rates ranging from 14.0000% to 15.7500%.
Available official data on the auction indicated that while 499 bids were received only 345 were successful and that at the end of the auction, the subscription totalled N807.9 billion out of which only N563.3 billion was allotted.
A decomposition of the auction based on the bonds’ tenors showed that the 20-year bond recorded the highest subscription of N355.633 billion. However, the 30-year bond got the highest allotment of N325.6 billion at the end of the auctioning session.
Analysts believe that the very high subscription rates for the 20-year and 30-year tenor sovereign bonds are a clear demonstration that Nigerian and foreign investors have confidence in the government’s debt instruments based on the security of investment and relatively high yield returns.
In addition, the investment experts strongly feel that the over-subscription for the bonds shows that the investors have confidence in the increasingly diversified Nigerian economy and the capacity of the Nigerian government to meet its debt obligations as of and when due to subscribers to its debt instruments.
