Business

DMO Fails To Raise N117bn, CBN Tightens Policy

Published

3 years ago

October 23, 2022

The Debt Management Office has failed to raise N117bn from the sales of Federal Government]s N225bn Bond programme as subscription levels weakened in its October FGN bond auction.

The auction document on the DMO’s website showed that the agency offered N225bn for subscription to investors but raised N107.88bn through re-openings of the 14.55 per cent FGN APR 2029, 12.50 per cent FGN APR 2032 and 16.25 per cent 2037 FGN bonds.

Unlike previous auctions with records of oversubscription, the total subscription level recorded at the October auction was the lowest so far in 2022 as the DMO struggled to secure a total subscription of N119.18bn.

It suffered an under-subscription of about N117bn, which may be seen as a loss to the Federal Government’s effort to finance its budget deficit.

The development came against the backdrop of the Central Bank of Nigeria’s recent discount window tightening.

The CBN recently insisted that certain categories of its authorised dealers are not allowed to access the discount window on specified transactions.

The central bank stated this in a circular to all dealers on the access to the discount window, which was dated October 7, 2022, and signed by the apex bank’s Director, Financial Markets Department, Dr Angela sere-Ejembi.

It specifically reminded participants with successful bids at the Open Market Operations auctions to refrain from accessing the discount window on the auction date.

The apex bank warned that henceforth, failure for non-compliance to the directive shall result in the reversal of the allotment.

Similarly, the bank emphasised that successful bids at the government securities auctions, including the Nigerian Treasury Bills, FGN Bonds, and Sukuk, are not permitted to access the CBN discounted window on the settlement date.

The CBN explained that the move was necessitated by the non-adherence to the provisions guiding access to the discount window despite two previous circulars on the subject in 2012 and 2016.

It appears that the recent discount window tightening has impacted the FGN Bonds at the primary market auction, forcing local banks to play safe as a possible breach of CBN discount window rules attracts severe financial penalties.

Reacting, an investment research analyst at Meristem Securities Limited, Mr Damilare Ojo, said that there were a number of reasons for the low bond subscription, including the CBN tightening policy.

He said, “It is very low, unlike what we have been seeing in terms of subscription. One reason is the CBN tightening policy, which has reduced liquidity from participating institutions, particularly banks.

“Also, when looking at the system generally, liquidity is very low. The market seems to be saying that for the government to get funds for its budget, it needs to up its game.

“Furthermore, in recent times, there have been speculations that the DMO wants to securitise the ways and means, which is over N20tn, competing with the 2023 budget, which is a huge amount. So, it seems people are holding back from that bond auction to see whether they will be better opportunities.”

Also, reacting to this, a research analyst at Atlas Portfolios Limited, Mr Olaide Baanu, said that the low subscription could be a result of higher rates in secondary markets.

He said, “Since the CBN began the rate hikes to curb inflation, rates in the fixed income secondary market began to trend upward and this poses reasonable returns for investors.

“However, the recent under-subscription of DMO N225bn offer could be attributed to higher rates in the secondary market compared to the rates presented by the DMO. Also, many investors are taking advantage of the exchange rate to invest in dollar-denominated funds.”

He also noted that this shortfall might not affect the Federal Government’s ability to finance its budget deficit as the government can source money elsewhere, like through borrowing from the CBN.

Business

Naira Depreciates Against Dollar

Published

1 week ago

July 4, 2025

Editor

The Naira experienced a slight depreciation on Friday at the official market, trading at N1,528.56 to the dollar.

Data obtained from the website of the Central Bank of Nigeria (CBN) showed that the Naira lost N2.73.

This represents a 0.17 percent loss compared to the N1,525.82 recorded on Thursday.

The Naira, which opened the week on Monday with a gain of N9.52 against the dollar, held steady gains until Thursday.

On Wednesday, the local currency gained N3.42 against the dollar and received commendation from the International Monetary Fund (IMF).

The IMF, in its 2025 Article IV Consultation report on Nigeria, commended the CBN for its reforms to the foreign exchange market, which supported price discovery and liquidity.

Business

JUST IN: Dangote Refinery Hikes Petrol Ex-depot Price

Published

3 weeks ago

June 20, 2025

Editor

Nigerians may soon pay more for petrol as the Dangote Petroleum Refinery on Friday increased its ex-depot price for Premium Motor Spirit to N880 per litre, raising fresh concerns over fuel affordability and price volatility in the downstream sector.

Checks on petroleumprice.ng, a platform tracking daily product prices, and a Pro Forma Invoice seen by The PUNCH confirmed the hike, representing a N55 increase from the previous rate of N825 per litre.

The increment would ripple across the entire fuel distribution chain, likely pushing pump prices above N900/litre in some parts of the country, especially in areas far from the distribution hubs.

The hike comes despite global crude prices falling. Brent crude dipped by 3.02% to $76.47, WTI fell to $74.93, and Murban dropped to $76.97 on Friday. The decline in benchmarks offers little relief due to persistent fears of sudden supply disruptions.

The refinery has increased its reliance on imported U.S. crude and operational costs amid exchange rate instability, which adds to its pricing pressure.

On Thursday, the President of the Dangote Group, Aliko Dangote, said his 650,000-barrel capacity refinery is “increasingly” relying on the United States for crude oil.

This came as findings showed that the Dangote Petroleum Refinery is projected to import a total of 17.65 million barrels of crude oil between April and July 2025, beginning with about 3.65 million barrels already delivered in the past two months, amid ongoing allocations under the Federal Government’s naira-for-crude policy.

Dangote informed the Technical Committee of the One-Stop Shop for the sale of crude and refined products in naira initiative that the refinery was still battling crude shortages, which had led it to resort to imports from the United States.

On Monday, the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Festus Osifo, accused oil marketers of exploiting Nigerians through inflated petrol prices, insisting that the current pump price of PMS should range between N700 and N750 per litre.

He criticised the disparity between falling global crude oil prices and the stagnant retail price of petrol in Nigeria.

“If you go online and check the PLAT cost per cubic metre of PMS, convert that to litres and then to our Naira, you will see that with crude at around $60 per barrel, petrol should be retailing between N700 and N750 per litre.”

He asserted that if Nigerians bear the brunt of higher fuel costs, they should be allowed to enjoy the benefit of low pricing.

His forecast of increased costs now appears spot on, considering the latest developments.

Marketers are already adjusting. Depot owners and fuel distributors in Lagos and other cities anticipate a domino effect, with new price bands expected to follow Dangote’s lead.

Many had held back pricing decisions since Tuesday, when the refinery halted sales and withheld fresh PFIs. The delay fueled speculation, allowing opportunistic price hikes across various depots.

Business

Naira Appreciates At Official Market

Published

2 months ago

May 24, 2025

Editor

The Naira, which has seen steady appreciation against the Dollar all week, closed stronger on Friday, trading at ₦1,580.44 in the official forex market.

Data from the Central Bank of Nigeria’s website show the Naira gained ₦4.51k against the Dollar on Friday alone.

This marks a 0.28 per cent appreciation from Thursday’s closing rate of ₦1,584.95 in the official foreign exchange window.

The local currency maintained consistent strength throughout the week, recording gains daily.

On Monday, May 19, it traded at ₦1,598.68; on Tuesday, at ₦1,590.45; and on Wednesday, at ₦1,584.49.

These gains suggest increased investor confidence and improved forex supply, contributing to the naira’s performance.

Meanwhile, the CBN, at its 300th Monetary Policy Committee meeting held Monday and Tuesday, retained the Monetary Policy Rate at 27.5 per cent.