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2022 Budget Deficit: FG Raise N2.28 Trillion Bonds, $4 Billion Eurobonds to Bridge Gap



DMO Re-Opens N225bn FGN Bonds, Subscription Begins October 17

In its move to bridge the 2022 budget gap, the federal government has so far raised N2.28 trillion FGN bonds/Saving Bonds in the domestic market and $4 billion Eurobond in the five months of 2022 on the Nigerian Exchange Limited (NGX).

The FGN Bonds/Saving issued by the federal government reached a new milestone in May 2022, as a total of N1.4 trillion was raised in the domestic market.

In April, a total of N297 billion FGN bond/Saving bonds was raised and N417.57 billion raised in March 2022.

The total amount raised was N483.11 million in February and in January; the government of Nigeria raised a combined N171.47 billion and $4 billion Eurobond as it struggles to bridge the 2022 budget deficit.

The Exchange in January announced the listing of the FGN $4 billion Eurobonds on its platform and it was issued in three tranches as follows: 6.125% FGN SEP 2028 worth $1.25 billion; 7.375% FGN SEP 2033 worth $1.5 billion and 8.25% FGN SEP 2051 worth $1.25 billion

NGX had explained that it continued to thrive as a multi-asset securities exchange providing access to a diversified range of assets including equities, fixed income, Exchange Traded Products (ETPs).

The former President, Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Madubuike in a chat with the press had said the intensive listing of federal government bonds implies that the capital market favours the economy.

According to him: “The stock market has witnessed improvement over the years and it has favoured the nation’s economy. This has impacted on the government listings its bonds on the Exchange. For so long stakeholders have been clamouring on the government utilizing the capital market as a long-term source for funds.

“Government is always the largest spender and when the government starts raising money through the capital market, of course, it brings about capital formation.”

He maintained that stakeholders would continue to canvas the government’s utilization of the capital market to finance the infrastructural deficit in the country.

“By doing so, we will then have a capital market that is a catalyst for economic development. The reason why you find a lot of borrowing coming from outside of the country.

“Out of these borrowings, a significant part of it could come from the capital market. A lot of people have argued that our capital market is not deep enough but we have found out that such argument does not hold water. It is the same market that carried banking sector consolidation. The issue is that managers of our economy must begin to look inwards.

“Other economies went through a 2008 global economic meltdown. They recovered using macroeconomy policies to ensure there are local activities. If there is no local activity, how do you expect your market to move?

“For me, it is good the government is listing but it is still a drop in the ocean for me. If the market pickup, then you will find out that corporate companies will show interest to list on the Exchange.

“However, when you have an economy with many uncertainties, the corporate listing is expected not to show interest listing. The macroeconomy situation does not favour production and ease of doing business.

“There are three factors that affect the market- inflation, exchange and interest rates. If all these things are not favourable, you can’t have corporate companies come to raise money.”

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