New Telegraph

Analysts: FG unlikely to achieve 70% domestic borrowing target

Although the Debt Management Office (DMO) is on track to meeting its domestic funding target of N7 trillion, the agency is unlikely to attain its target of 70 per cent on domestic debt component of public debt by the end of this year, analysts at FBNQuest have said. The analysts, who stated this in a report released yesterday, noted that the DMO’s latest data series on public debt showed a debt split of 60:40 for the domestic and external components re- spectively compared with the 70:30 split in its 2020 to 2023 medium-term debt strategy document. According to the analysts, “while the anticipated ramp-up in domestic borrowings this year will shift the balance of domestic debt higher, it is highly unlikely for the proportion to hit the 70 per cent target.” Commenting on the DMO’s monthly auction of FGN bonds held on Monday, the analysts noted that although the agency ended up raising N369 billion, a little more than what it had on offer, “the sum raised is the lowest this year and is -35 per cent less than sales for the previous month.” They, however, added that if non-competitive bids are included, the total sales rise to N552 billion. Although they attributed the low investor appetite mainly to the market’s negative liquidity position over the past month, the analysts pointed out that the total amount (excluding non-competitive bids) raised by the DMO from its monthly bond auction this year still amounts to a record N2.4 trillion which is significantly higher than the N984 billion raised by the agency over the comparable period of 2022. “If we include sales generated from other instruments such as treasury bills, sukuks, savings bonds, and others, the agency is well on track to meet its domestic funding target of N7.0 trillion,” the analysts added.

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