DMO sets to offer N110 billion worth of FGN bonds

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The Debt Management Office DMO has announced it will kick-start bond issuance with N110bn offer worth of FGN bonds in the commencement of its 2018 bond issuance programme.

 

The Debt Management Office DMO said its bond issuance programme for the first quarter of the year (Q1 2018) showed plans to raise between N325 billion and N375 billion in the quarter, which is lower than the N535 billion raised in Q1’17 and the average of N380 billion issued last year.

Analysts at Lagos based Afrinvest, projected that the N110 billion bonds will be issued at lower yield in tandem with declining yields on government securities (Treasury bills). They said “From our analysis, given the moderating yield environment and in line with current realities, we forecast a slightly lower issue yield estimated at 13.17 percent and 13.19 percent for July 2021 and MAR 2027 relative to the Dec-2017 Auction issue yield of 13.19 percent and 13.21 percent respectively”, they stated. The  outflow of N110 billion through the bond offer, combined with lower inflow from matured treasury bills (T-Bills) this week of N64 billion, as against N263 billion the previous week, indicates that the CBN might reduce its liquidity mop-up operations this week and hence enhance stable  cost of funds in the interbank money market’’. ‘Sic’

Meanwhile, cost of funds rose sharply as the CBN mopped–up N237.06 billion through Open Market Operations (OMO) T-Bills. The apex bank sold N230 billion worth of primary market (fresh) T-Bills to offset the impact of the inflow of N263 billion from matured T-Bills during the week. Consequently, average short-term cost of funds rose by 792 basis points (bpts) during the week.

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