FG to raise N150 billion today selling bonds

Last week, secondary market trading on the federal government’s bonds had continued on a bearish note as investors exited positions following the release of the inflation rate pegged at 18

MAYOWA SAMUEL • April 22, 2021

President Muhammadu Buhari and Nigerian Minister of Finance Zainab Shamsuna Ahmed

President Muhammadu Buhari’s regime has made moves to raise N150 billion by issuing medium- and long-term bonds.

The federal government will raise the bonds at the primary segment of the debt market on Thursday.

According to the Voice of Nigeria, the primary market auction involves reopening a medium-term bond and two long-term bonds with an offer size of N50 billion each.

These bonds include the 16.2884 per cent of the federal government’s March 2027 bond, 12.50 per cent March 2035 bond, and 9.80 per cent July 2045 bond.

The 16.2884 per cent March 2027 bond has five years and 11 months to maturity, while the 12.50 per cent March 2035 bond and 9.80 per cent July 2045 bond have 13 years and 11 months, and 24 years and three months, respectively.

The previous stop rates for the three bonds were 10.5 per cent, 11.5 per cent and 12.00 per cent.

Last week, secondary market trading on the federal government’s bonds had continued on a bearish note as investors exited positions following the release of the inflation rate pegged at 18.17 per cent.

Data showed that the slowdown in demand pushed average yield across the curve by 108 basis points (bps) to 11.45 per cent by the weekend as against 10.37 per cent penultimate weekend.

The short-dated maturities such as 27-Apr-23, 14-Mar-24, and 23-Mar-25 recorded the most sell-offs, advancing 333 bps, 272 bps, and 202 bps, respectively, during the week.

The fixed-income market has taken a bearish note recently as investors slowed down from the previous rush to rebuild fixed-income portfolios.

The VON reports that the Central Bank of Nigeria’s open market operation maturities worth N10 billion, which will hit the system this week, will continue to put the funding levels under pressure.

Last week, the Nigerian Treasury Bills traded negative at the secondary market following pressured liquidity levels and primary auctions.

Average yields across the curve dipped slightly by five basis points last week to settle at 4.35 per cent from 4.40 per cent recorded in the previous week.

The 26-Aug-21 and 9-Sep-21 bills witnessed the most buying interest from investors, declining 37 basis points and 33 basis points.