The Federal Government plans to raise about N471 billion in new debt capital from the domestic capital market this quarter as the government begins fund raising to bridge 2022 budget deficit of about N6.39 trillion.
Provisional debt issuance calendar of the government at the weekend showed that it will be raising about N471 billion through issuance of short to long-term ordinary bonds and low-end retail savings bonds.
According to the issuance plan, the first auction for ordinary short-to- long term bonds will take place this Wednesday, the same settlement date for the January 2022 issuance of the monthly Federal Government of Nigeria Savings Bonds (FGNSBs), which application closed at the weekend.
Under the first auction, the government is offering to raise a total of N150 billion in equal amount of N75 billion each through a reopening of its 12.50 per cent FGN January 2026 bond and issuance of a new 20-year long-term bond due for maturity in 2042.
The size of the monthly FGNSB is determined by the book orders and usually disclosed after the settlement; but the government had raised N302 million in its last savings bonds in December 2021. The government has since 2017 been issuing the retail savings bonds every month, with a dual objective of revenue financing and development of domestic savings culture. The January 2022 offer was the 55th tranche of the savings bond, introduced in 2017.
The Debt Management Office (DMO), which oversees government’s debt issuances and management, had at the weekend closed applications for a Two-Year FGN Savings Bond due January 19, 2024 and a Three-Year FGN Savings Bond due January 19, 2025. The coupon or interest rate for the two-year bond was 7.542 per cent yearly while the three-year bond carried a coupon of 8.542 per cent per annum.
The government plans to raise between N140 billion and N160 billion in February 2022 through the another reopening of its 12.50 per cent FGN January 2026 bond and a reopening of the new 20-year long-term bond due for maturity in 2042 billed for auction this Wednesday.
The February 2022 issuance programme will be repeated in March 2022 to raise between N140 billion and N160 billion through reopening of the 12.50 per cent FGN January 2026 bond and the 20-year January 2042 bond.