The Federal Government raises ₦346.155 billion during its November 2024 bond auction, achieving higher allotments despite a reduction in the total amount offered. The Debt Management Office (DMO) conducts the auction on November 18, reopening the 19.30% FGN APR 2029 (5-Year Bond) and the 18.50% FGN FEB 2031 (7-Year Bond).
Key Auction Details
In November, the government offers ₦120 billion—₦60 billion for each bond series—representing a 33.33% decrease from the ₦180 billion offered in October. Despite the reduced offering, allotments increase by 19.50%, rising from ₦289.597 billion in October to ₦346.155 billion.
- 5-Year Bond: ₦63.530 billion is allotted, compared to ₦57.237 billion in October.
- 7-Year Bond: ₦282.625 billion is allotted, up from ₦232.360 billion in the previous month.
Strong Investor Participation
Total bids for the auction reach ₦369.585 billion, reflecting a 208% subscription rate. This level of interest slightly declines by 5.06% compared to October’s ₦389.321 billion.
- 5-Year Bond Subscriptions: Increase to ₦75.560 billion, up from ₦60.737 billion in October.
- 7-Year Bond Subscriptions: Decline to ₦294.025 billion from ₦328.584 billion.
Inclusion of Non-Competitive Allotments
The auction incorporates a ₦500 million non-competitive allotment for the 5-Year Bond. This feature allows retail investors and smaller-scale participants to access government securities without competing on marginal rates, fostering broader market participation.
No non-competitive allotment is provided for the 7-Year Bond, indicating a focus on institutional bids for this longer-term instrument, which attracts substantial investor demand.
Marginal Rates and Bidding Trends
Marginal rates rise in November, reflecting tighter liquidity conditions:
- 5-Year Bond: Marginal rate climbs to 21.00% from 20.75% in October.
- 7-Year Bond: Marginal rate increases to 22.00% from 21.74%.
Bid ranges highlight robust competition:
- 5-Year Bond: Bids range from 19.00% to 21.90%.
- 7-Year Bond: Bids span from 18.00% to 23.00%.
Broader Implications
The overwhelming interest in the 7-Year Bond demonstrates investor preference for longer-duration instruments, reflecting expectations of sustained high-interest rates. The sharp contrast between subscription and allotment levels shows the DMO’s calculated approach to balancing funding needs with market stability.
Higher marginal rates and increased allotments signal the government’s ability to secure funds despite evolving market dynamics. However, rising borrowing costs underscore the importance of directing these resources toward critical sectors to support sustainable growth.
 conducts the auction on November 18, reopening the 19.30% FGN APR 2029 (5-Year Bond) and the 18.50% FGN FEB 2031 (7-Year Bond).){kind=link}