DMO sells Federal Government bonds worth N2.51 billion
THE Debt Management Office (DMO) says it has sold Federal Government bonds worth N2.51 billion to date. The Director General of the DMO, Dr. Abraham Nwankwo disclosed this on Wednesday at a workshop on the Nigeria Federal Government Bond Market in Lagos.
He said that the DMO had recorded a total subscription of N4.5S billion and allotted bonds worth N2.52 billion, which were issued in tenors of 3,5,7 and 10 years. He said that the 20-year bonds were issued in November 2008.
Nwakwo said one of the landmark developments in the financial market was that the country now had a domestic yield curve that extends to 20 years.
According to him, the development provides a benchmark against bonds issued by other entities.
Nwankwo said the introduction 'of the Primary Dealers and Money Makers in 2006 was to provide liquidity for Federal Government Bonds.
He recalled that the absence of liquidity in the Federal Government Development Stocks, sub-national bonds and corporate bonds were some of the factors that led to dormancy in the bond market.
Nwankwo noted that although the domestic bond market had evolved rapidly in the last six years, particularly trends in the sub-national and corporate bond segments, it still had challenges. '
He said that the challenges included the provision of an electronic bond auction, a trading system and a disparate tax treatment for bonds. Others, the DMO director general said, were the introduction of new products to deepen the market and constraints imposed by the Land Use Act.
The Chairman of the Bond Dealers Workgroup, Nigeria, Mr. Samuel Ocheho, in his opening address called for transparency in the activities of the domestic bond market.
Ocheho said that a proper framework and good corporate governance should be observed in regulating the market. The Deputy Managing Director of BGL Securities Ltd, Mr. Wale Oluwo said that the issuing of bonds had become popular with the corporate sector and the state governments. He said that the bonds would not disappoint investors like equities, whose prices were now falling.
Oluwo said that bonds were desirable and suggested that companies should be encouraged to issue them. He urged investors to go for them because they generated fixed incomes for investors. Olowu, however, noted that bonds were now generally over-priced and urged operators to reduce their charges to encourage people to invest in them.
