Friday, March 23,
2018 / 08:47 AM / FBNQuest Research
At this week’s monthly auction of FGN bonds, the DMO offered
N80bn, attracted a total bid of N143bn and raised N64bn (US$210m) from sales.
It has therefore raised N254bn in Q1, compared with N430bn in the same quarter
period of last year.
The DMO achieved what we might term textbook front-loading of
issuance in 2017 whereas this year it has been under much less pressure. The
FGN’s borrowing costs have fallen sharply over six months, by almost 650bps at
auction for the 364-day NTBs and by more than 250bps on the same basis for the
July ’21 bonds.
These savings are considerable
and could potentially give an important boost to the FGN’s plans for capital
expenditure. The federal finance minister, Kemi Adeosun, said before the two
latest Eurobond launches (November 2017 and February) that the issues should
create annual savings of N168bn on debt service.
The estimate factored in the
element of “externalization” in official debt strategy. This is visible in the
FGN’s changing domestic debt profile: the stock of NTBs declined by N200bn in
Q4 because the authorities deployed some Eurobond sale proceeds to pay down
maturing T-bills (Good
Morning Nigeria, 19 March 2018
The minister did not share the
interest rate assumptions underpinning the estimate of savings. About half the
yield compression of the past six months has come in the past three, so the
assumptions may be in need of revision.
The DMO can also step back a little because
it has more products to offer. 2017 brought its first sukuk and its
first green bond issue, raising N100bn and N11bn respectively. The federal
environment ministry has suggested that it could collect a further N150bn from
green bond sales this year.
rates crash by c.14pct as inflows from OMO and PMA Repayments bolster
- Bond Yields
Decline as Auction rates clear c.35bps lower on the 5- and 10-yr
Cement Plc Plans to Raise $833m Via Bonds to Fund Expansion
- Ahead of
Next T-bills Auction Scheduled 21st March, 2018
Uptick in Bond Yields as Market Players anticipate Dual Bond and T-bill
Ratios for External Debt
- Bond Yields
Stay Flat as CBN Resumes OMO
- Pan African
Local Currency Government Debt- African Domestic Bond Fund (ADBF)
African Bond Market
Management Strategies Reduce Interest Expense
Bullish Trend to Push Rates Lower as PMA Holds on Wednesday; Indicative
Public Debt as at December 31, 2017 Represents 18.20% of Nigeria’s GDP for
2017 - DMO