The Debt Manage¬ment Office (DMO) third auction of FGN bonds this year raised N85billion ($510million) and attracted a total bid of N186billion, which was virtually un¬changed from the previous month.
The offshore bid ap¬pears to have been thin. The marginal rate on the 13.05% Aug ‘16s picked up from 13.49% in February to 14.10%, which marked the fourth successive monthly increase under the cloud of tapering.
The DMO also sold a new 10-year bench¬mark issue, the Mar ‘24s, for which the marginal rate of 14.20% becomes the coupon. It was evi¬dently pleased with the size (N114bn) and level of the bid because it offered N45bn and sold N50bn of the new instrument.
The FGN’s latest 2014 budget proposals project net borrowing of N572bn towards deficit financ¬ing of N912bn although more than N200bn could be raised from the sale of Eurobonds and a Diaspora instrument.
The DMO has now raised N265bn (gross) in three months. We would expect lighter proposed is¬suance in the calendar for Q2 2014.
The stronger report for non-farm payrolls for February out of the US on Friday suggests that the next meeting of the FOMC will announce an¬other $10bn reduction in the Fed’s monthly asset purchases. The yield on the new FGN bond is about 550basis points (bps) higher than that on a South African govern¬ment instrument of simi¬lar tenor.
