The Federal Authorities has raised about N4.13tn from bonds within the first half of 2024.
This was revealed within the FMDQ Trade Monetary Markets Month-to-month Report for June 2024.
The worth of recent issuance of FBN bonds for June, which was N297.01bn, was the bottom in six months and the very best was N1.49tn in February.
In January, the worth of FGN bonds issued was N418.20bn, N608.86bn in March, N628.81bn in April and rose to N682.07bn in Could.
On the finish of June 2024, the worth of excellent FGN bonds, which incorporates financial savings and inexperienced bonds, stood at N26.22tn, which is about 44.49 per cent greater than on the finish of the identical interval in June 2023 (N18.15tn).
For the February bond issuance, the Debt Administration Workplace stated the comparatively great amount supplied was based mostly on the FGN’s financing want, the chance to draw overseas buyers, in addition to, the premise that some native buyers could possibly entry swimming pools of funds.
The Federal Authorities supplied a N1.25tn seven-year FGN bond maturing in 2031 and one other N1.25tnn 10-year FGN bond maturing in 2034 in February.
It obtained whole bids of N1.9tn, making it the very best it has obtained in anybody FGN Securities Public sale and allotted N873.53bn for the seven-year bond and N621.38bn 10-year bond, making a complete allotment of N1.49tn.
Within the second quarter, there have been seven reopened bonds; two in April (FEB 2031 and FEB 2024), two in Could (APR 2029 and FEB 2031) and all of the bonds issued in June have been re-openings (APR 2029, FEB 2031 and MAY 2033, which was issued a month earlier).
The rates of interest on the bonds ranged from 18.50 per cent to 19.89 per cent.
As of Could, the DMO has an impressive N1.5tn to boost from the Federal Authorities’s proposed N6tn bond having already raked in N4.5tn from earlier issuances.
The Director Normal of the Debt Administration Workplace, Persistence Oniha, at an interactive session with main seller market makers in Lagos, famous that home securities remained a significant supply of Federal Authorities spending.
She stated, “Final yr, we raised N7tn as new home borrowing. It speaks to the scale of the home market, its resilience, and its sophistication, in contrast to we have now in lots of African markets.
“Out of the brand new home borrowing of N6tn we have now raised N4.5tn. For the Methods and Means, out of N7tn accredited for securitisation, we have now raised N4.9tn.”
Because the starting of the yr, buyers have proven curiosity within the long-term FGN bond. The report on capital importation for Q1 2024 launched by the Nationwide Bureau of Statistics, confirmed that it rose to the pre-pandemic excessive, hitting $3.38bn within the first quarter of 2024, on the again of rate of interest hikes in Nigeria and price cuts in superior economies.
A more in-depth take a look at the report confirmed that overseas portfolio funding contributed the majority of the whole capital imported into Nigeria in Q1-2024, accounting for 61.5 per cent greater than the 28.5 per cent contribution in This fall-2023.
Complete FPI inflows stood at $2.1bn in Q1-2024, 570.1 per cent greater than $309.8m in This fall-2023 and 219.7 per cent greater than $649.3m in Q1-2023.
With the latest hike within the Financial Coverage Fee by the Central Financial institution of Nigeria, analysts have been of the view that it will result in an upward repricing of fixed-income devices, particularly short-term belongings, starting from treasury payments to business papers, which might naturally make these investments extra engaging to buyers in comparison with shares.
“This pattern is obvious from the latest treasury payments public sale, the place the typical cease charges throughout all devices rose by 172bps to twenty.0 per cent. Moreover, we anticipate an elevated yield within the bonds market, although at a reasonable tempo.
“Conversely, stress on curiosity expense and revenue margins might boring the outlook on company earnings, resulting in subdued equities sentiment — different issues equal. This may be a push issue to the fastened earnings area, whereas engaging yields pull buyers in,” analysts at Afrinvest stated of their weekly market report.
In the meantime, the Minister of Finance and Coordinating Minister of the Economic system, Wale Edun, stated that Nigeria deliberate to problem a diaspora bond of as much as $500m as a part of its technique to stabilise and develop the financial system.
In response to the minister, the home dollar-denominated bond, set for issuance within the third quarter, goals to draw funding from Nigerians residing overseas and people with financial savings held abroad but in addition to display the power and resilience of the financial system amidst ongoing financial reforms.