The Debt Management Office (DMO) said on Tuesday that it was able to raise only N1.495 trillion as its monthly auction of February 2024 from the N2.5 trillion ought to be raised. The failure was a result of tight market subscriptions.
At the close of the auction, a total of N873.53 billion was allotted for the 2031 FGN bond and N621.38 billion was allotted for the 2034 FGN bond, making a total allotment of N1.495 trillion.
DMO offered N1.25 trillion seven-year bond, maturing in 2031 and another N1.25 trillion 10-year FGN bond, maturing in 2034. The debt office said that it received total bids of N1.9 trillion, making it the highest it received in any of the FGN securities auctions.
“The relatively large amount on offer was based on the FGN’s financing need, the opportunity to attract foreign investors, as well as, the premise that some local investors may be able to access pools of funds,” it said.
The auction was undersubscribed largely due to weak appetite for naira assets, with both the bid-to-offer and bid-to-cover settling at 0.76x and 1.27x, respectively. According to analysts’ reports, the average stop rate printed at 18.75% as against 15.75% in January 2024.
“To our minds, we perceive that these recent aggressive issuances by the government might have been necessitated by the desire to cut back on the arbitrary CBN Ways and Means financing, incentivise foreign investment and mop up expected liquidity”, CardinalStone Partners said in a commentary.