The Federal Government has come up with another way to get money to fund the nation’s budget. Now through the Debt Management Office, DMO, the FG is set to raise another bond amounting to N110 billion for budgetary deficit funding next week.
The bond issue is coming against the backdrop of an emerging discord between the executive and the legislative arms of government over the resort to borrowings for budget funding. Next week’s bond issue will be the second this year, which in addition to another issue planned for next month, will bring the total amount of debt raised in the first quarter of 2017 to N430 billion.
Under the debt auction, the DMO said it will issue N45 billion of bonds maturing in 2021, N20 billion of 2026 paper, and N45 billion of bonds due in 2036, using the Dutch auction system. Settlement for the bonds, all of which are re-openings of previous issues, is expected Thursday, February 16, 2017.
DMO uses monthly sovereign bond sales to support the local debt market, create a benchmark for corporate bonds and fund Federal Government’s budget deficit. The cumulative deficit for 2016 and 2017 is estimated at about N4.1 trillion, a bulk of which would be financed through transactions such as this.