FG seeks N450 billion from June 2024 bond auction

The Federal Government plans to raise at least N450 billion through its latest bond offer for June 2024, as announced by the Debt Management Office (DMO). 

The bond offer will be conducted by auction and comprises three different re-openings, each with distinct maturity dates and interest rates. 

Breakdown of the Bond Offer 

The June 2024 bond offer includes: 

• N150 billion at 19.30% FGN APR 2029 (5-Year Re-opening) 

• N150 billion at 18.50% FGN FEB 2031 (7-Year Re-opening) 

• N150 billion at 19.89% FGN MAY 2033 (9-Year Re-opening) 

The auction date is scheduled for June 24, 2024, with settlement on June 26, 2024. The minimum subscription requirement is N50,001,000, and subsequent bids must be in multiples of N1,000.

This offer is pursuant to the Debt Management Office (Establishment) Act 2003 and the Local Loans (Registered Stock and Securities) Act, CAP. L17, LFN 2004, providing a legal framework for the bond issuance. 

Interested investors can subscribe to the bonds through any of the authorized Primary Dealer Market Makers (PDMMs), which include leading financial institutions such as Access Bank Plc, First Bank of Nigeria Ltd, Stanbic IBTC Bank Ltd, Citibank Nigeria Ltd, and others. 

What you should know 

The bond auction was initially scheduled for June 17, 2024. However, in a recent public notice, the DMO announced a change in the auction date for the June 2024 bond offer.

• The auction was moved to June 24, 2024, due to the Federal Government’s declaration of June 17 as a public holiday to mark Eid Al-Adha. The settlement date remains June 26, 2024. 
• The primary objective of this bond offer is to raise substantial capital to support the government’s fiscal policies and infrastructure development. 
• By issuing these bonds, the FGN aims to attract both local and international investors, thereby increasing the financial inflow into the country’s economy. 
• These funds are crucial for financing key projects in sectors such as transportation, healthcare, education, and power. 
• Moreover, the raised capital will help the government meet its budgetary commitments and reduce the reliance on external borrowing, which often comes with stringent conditions and higher interest rates. 
• Although the government also planned to raise N450 billion in the previous month’s auction, it ended up raising N380.769 billion despite the oversubscription of the bonds. The amount raised was 39% less than what was raised in the April FGN bond auction.
• The aggregate subscription across all tenors was N551.316 billion, far lower than the N920.088 billion in subscriptions recorded in April 2024. 
• However, the DMO also recorded a non-competitive allotment of N301.300 billion, suggesting continued interest from certain institutional investors, despite the broader market’s reticence.