CEM REPORT, FINANCE | The Debt Management Office (DMO) has lamented that the Central Bank of Nigeria (CBN)’s policies are having adverse effects on liquidity in the financial markets.
The debt office alleged that the CBN policies are equally making it difficult to sell even sovereign instruments that are regarded as risk-free.
Director-General, DMO, Patience Oniha, at the IFN Africa Dialogue and Report 2022, explained that in the domestic market, rates have gone up, adding that the amount of liquidity available for banks to invest in Federal Government of Nigeria (FGN) securities and probably other securities are limited.
“In October, the DMO could not raise N117 billion from the sale of FGN’s N225 billion bond programme because subscription weakened during the October FGN bond auction.”.
The DG speaking at the event which was streamed live on YouTube stated that the DMO offered N225 billion for subscription to investors but was only able “to raise N107.88 billion through re-openings of the 14.55 percent FGN APR 2029, 12.50 percent FGN APR 2032 and 16.25 percent 2037 FGN bonds”.
This implies that as the Federal Government is having difficulty raising funds to finance its budget, the widened budget deficit may further put pressure on the government’s finances, especially in the areas of capital projects.
Meanwhile, the debt office will this week auction N225 billion worth of local bonds.
The auctions would be through N75 billion a piece for the 14.55 percent Federal Government of Nigeria (FGN) April 2029, 12.50 percent FGN April 2023, and 16.25 percent FGN April 2037 re-openings.
Dealers would be expecting the stop rates to moderate, as DMO might mirror the declining trend in the money market stop rate.