The Debt Management Office (DMO) is expected to issue Federal Government of Nigeria (FGN) bonds worth between N180 billion and N240 billion in September. This deduction by Olubunmi Ashaolu, head, markets, FBN Capital, was based on DMO’s provisional issuance calendar for the third quarter which ends in September.
According to him, the DMO would be issuing the bond at a period characterized by uncertainty. “The 2015 budget was finally signed off by the last President. To an extent, the market was bought into the idea that the new administration will bring greater fiscal discipline. We expect that it will deliver, but not in time to make a marked impact in the third quarter,” he said.
Ashaolu said the DMO has a new challenge in the form of apparent investor fatigue, stating that after a healthy recovery in demand in both April and May 2015, the total bid in June dipped again to N131 billion. He said the delayed FAAC distribution was also to blame. He also cautioned Nigerians against over-expectation from the current administration because, the leakages it is struggling to block were not created overnight.
Similarly, the Director-General, West African Institute for Financial and Economic Management (WAIFEM), Professor Akpan Ekpo, has asked the DMO and state governments to either slow down or temporarily halt debt issuance because of Nigeria’s rising debt profile. Nigeria’s domestic and external debt stocks currently stand at N12.06 trillion as at March 31.
He pointed out that the practice where most of the commercial banks buy the issued bonds, make their margins and declare huge profit does not benefit the economy. Ekpo added that the current practice where government borrows to pay salaries is not only worrisome, but dangerous for the economy. “There should be a temporary halt for debt issuance. We also need to monitor our external borrowings,” he said.
By Dike Onwuamaeze
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