Investors in the Federal Government bond once again showed strong preference for the longer termed 30-year bond that was introduced in April, the Debt Management Office has said.
This was disclosed in a statement the DMO issued on Wednesday in Abuja, after the May bond auction where it offered three instruments for five, 10 and 30-year tenors to the investing public, at a total amount of 100 billion naira.
It stated: “As with the April auction when the 30-year bond was first offered to the market, investors showed a stronger demand for it with subscription of over N100 billion compared to the N30 billion offered.
“This clearly indicates that the DMO understands the needs and preferences of investors in terms of tenor, which informed its introduction of the 30-year bond.”
The auction result circular obtained from the DMO website said N48.93 billion was finally allotted for the 30-year instrument at 14.49 per cent.
It said the five and 10-year instruments were equally oversubscribed, compared to the 35 billion naira offered for each of them.
The five year bond had a total subscription of N45.98 billion, but N27.38 billion was allotted at 14.11 per cent, while the 10-year instrument had a total subscription of N124.22 billion, but 35 billion naira was allotted at 14.24 per cent.
It stated: “In addition to the strong demand, interest rates demanded by investors also significantly declined for all the instruments compared to the April auction.”
The News Agency of Nigeria reports that Patience Oniha, the Director-General, DMO, had at a news conference on May 16, said the 30-year bond that was introduced in April was for the benefit of the Federal Government.
This, she said, was because it would help in managing liabilities and financing infrastructure.
She also said that it would help in the management of risks associated with the debt stock to mitigate debt service costs.