The federal government has raised N225.714 billion in the July 2024 bond auction, which is about 75% of its target as demand for short-term bonds weakens.
Last month, about N297.006 billion was raised from the June bond auction, which means that the amount raised this month has dropped slightly by 24%.
While the federal government offered a total of N300 billion across the three different bond tenors in the latest auction, total subscription for the July 2024 FGN bond auction amounted to N279.664 billion, which is an undersubscription of N20.336 billion.
Amid the undersubscription, the total amount allotted to successful bids in the auction was N225.714 billion, which is slightly less than the total subscription.
The auction results, released by the Debt Management Office (DMO), reveal strong investor interest in longer-term securities while demonstrating a noticeable reluctance towards shorter-term bonds.
The auction featured three re-openings of Federal Government of Nigeria (FGN) bonds: the 5-year, 19.30% FGN APR 2029; the 7-year, 18.50% FGN FEB 2031; and the 9-year, 19.89% FGN MAY 2033. The total bids received for these bonds amounted to 186, highlighting a moderate level of participation and competitive interest.
The July 2024 bond auction results reflect a notable trend in market sentiment, with investors displaying a marked preference for high-yield, longer-tenor bonds.
This trend aligns with the broader economic environment, where investors are looking for stable and attractive returns in government securities.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is currently having its meeting, which will likely lead to a higher interest rate and higher yields for investors.
