DMO blames system issues for delay in coupon payment on FGN savings bonds 

The Debt Management Office (DMO) has attributed the recent delay in coupon payments to savings bond subscribers to system and processing issues according to reports from Bloomberg.

The first coupon payment on the two-year and three-year debt instruments, through which the government raised N4.2 billion in June, was due on Sept. 12 but remains unpaid.

This marks the second consecutive delay in fulfilling obligations on a savings bond, according to investors.

Patience Oniha, head of the debt management agency, attributed the delay to a “system, process issue,” which is “being addressed,” she said in response to questions. “I expect an outcome today,” she added on Friday.

Subscribers to the savings bonds reported a week-long delay in coupon payments due in August, marking the first such delay since the instruments were introduced seven years ago. The delayed payment could raise concerns about the government facing pressure from its increasing debt burden.

According to fiscal accounts on the government’s open treasury website, debt service payments amounted to 2.3 trillion naira in the first three months of the year, nearly double the revenue of 1.4 trillion naira during the same period.

Result of the June auction bonds 

The federal government raised N297.006 billion from the June bond auction, representing about 66% of its target. This amount is roughly 22% lower than the N380.769 billion raised in May.

Total subscriptions across all tenors in June amounted to N305.257 billion, significantly lower than the N551.316 billion subscribed in the previous month.

The auction held on June 24, 2024, featured the re-opening of three Federal Government of Nigeria (FGN) bonds: the 19.30% FGN APR 2029, the 18.50% FGN FEB 2031, and the 19.89% FGN MAY 2033.

Although the government offered N450 billion across these bonds, total subscriptions reached only N305.257 billion, with N297.006 billion allotted, reflecting a notable undersubscription.

About the FGN bonds offers 

The Debt Management Office issued the bonds at 17.4% for the two-year and 18.4% for the three-year securities between June 3 and 7, with coupon payments scheduled quarterly — on Sept 12, Dec 12, March 12, and June 12, as stated on the agency’s website.

• Introduced in 2017, the savings bond aimed to diversify Nigeria’s borrowing sources and offer retail investors an opportunity to earn income by investing in government securities.
• The main goal of these bond offers is to generate significant capital to support the government’s fiscal policies and infrastructure development initiatives.