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.