Amid Rising Deficit Financing, Nigeria borrows N1.99tn via bonds in six months

Amid Rising Deficit Financing, Nigeria borrows N1.99tn via bonds in six months
Nigeria’s bond offer and allotment rose by N1.99tn in the first six months of this year to N13.66tn, from the N11.67tn recorded in the corresponding period of last year.
The Financial Markets Department of the Central Bank of Nigeria disclosed this in its half-year activity report for 2021. It attributed the rise to government’s drive to fund fiscal deficit from the domestic market.
The report stated that, “In the review period, FGN bonds worth N900bn was offered, while public subscription and sale stood at N1.73tn and N1.42tn, respectively. The amount offered comprised new issues and re-openings of FGN bonds.
“In the corresponding period of 2020, FGN bonds issue, subscription and allotment were N615bn, N2.45tn and N1.31tn, respectively. The increase in offer and allotment in the first half of 2021 was attributable to the government’s drive to fund fiscal deficit from the domestic market. Consequently, the total value of FGN bonds outstanding at end-June 2021 stood at N13.66tn, compared with N11.67tn at end-June 2020, indicating an increase of N1.99tn or 17.01 per cent.”
The report stated that in the first half of 2021, there was no new issue of the Federal Republic of Nigeria Treasury Bonds.
Consequently, it added, the outstanding stock stood at N100.99bn, same as at end-June 2020.
A breakdown of the outstanding showed that the CBN held N18.01bn, while N82.98bn was held in the sinking fund. In the corresponding period of 2020, it added, the CBN held N27.99bn, while N73bn was held in the sinking fund.
The report stated that during the first six months of 2020, “the total NTBs issued and allotted was N1.6tn apiece, indicating an increase of N149.94bn or 9.89 per cent above N1.52tn issued and allotted apiece, in the corresponding period of 2020. “Total public subscriptions stood at N3.1tn, compared with N2.9tn in the corresponding period of 2020.
“The increase in public subscription was attributed to the increased yield on NTBs, which was market driven amidst investors’ demand for higher yields.”
It added that the holding structure of the instrument indicated that Deposit Money Banks took up N1.25tn or 75.31 per cent, while mandate and internal funds customers, including CBN branches accounted for the balance of N411.22bn or 24.69 per cent.