DMO FGN bond witnesses 530% oversubscribed in September

Debt Management Office (DMO) in September witnessed a 530 per cent oversubscription in investors ‘ demand in its monthly bond auction.

The DMO said it recorded a total subscription of N1.26 trillion against the N200 billion on offer, with allotments rising to N576.62 billion compared to just N136.16 billion in August.

This happened in spite a reduction in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN).

The DMO offered two instruments in September—the 17.945% FGN AUG 2030 (5-year reopening) and the 17.95 per cent FGN JUN 2032 (7-year reopening)—with N100 billion offered on each.

The 5-year paper drew N231.79 billion in bids, up from N102.36 billion in August while the 7-year series attracted N1.03 trillion, compared to just N165.81 billion the month before.

In total, subscriptions increased more than fourfold, from N268.16 billion in August to N1.26 trillion in September.

This meant a bid-to-offer ratio of 6.3 times—an oversubscription rate of 530 per cent.

The DMO responded by allotting N576.62 billion in September, significantly higher than the N136.16 billion in August. Most of the allotment went to the 7-year tenor, which received N488.83 billion compared to N90.16 billion in August. The 5-year tenor saw allotments rise to N87.80 billion from N46.01 billion previously.

One of the striking features of the September auction is the moderation of stop rates, despite the flood of bids.

The 5-year paper cleared at 16.00 per cent, down from 17.945 per cent in August. The 7-year tenor settled at 16.20 per cent compared with 18.00 per cent in the prior month.

The range of bids also narrowed significantly. In August, investors priced the 5-year anywhere from 12.50 per cent to 21.50 per cent. By September, the range compressed to 15.00 per cent to 17.95 per cent. Similarly, the 7-year range tightened from 15.00 per cent –22.00 per cent to 14.95 per cent –19.20 per cent.