DMO OFFERS ₦1TN FEDERAL GOVERNMENT BONDS TO INVESTORS

The Debt Management Office has opened subscription for two Federal Government of Nigeria bonds worth a combined ₦1tn, giving investors an opportunity to purchase government securities with different maturity periods. The offer, which opened on September 14, is being made at ₦1,000 per unit, while the minimum amount that an investor can subscribe to has been fixed at ₦50m.

According to the DMO, the first security is a new 10-year FGN bond valued at ₦400bn and scheduled to mature in September 2036. The second is a ₦600bn reopening of an existing 15-year FGN bond that is due in 2038 and carries a coupon rate of 15.45 per cent per annum. The settlement date for both offers has been fixed for September 16.

The debt office stated that subscriptions for the bonds must be made at a minimum of ₦50m and in multiples of ₦1,000 thereafter. For the reopened bond, where the coupon rate has already been determined, successful investors will pay a price based on the yield-to-maturity bid that clears the volume being offered, in addition to any accrued interest applicable to the security.

The DMO also explained that interest on the bonds would be paid twice a year, while the principal would be repaid in full when each bond reaches its maturity date. Like other Federal Government securities, the bonds are backed by the full faith and credit of the Federal Government and are charged upon the general assets of Nigeria, while they are also listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange.

FGN bonds are fixed-income securities issued by the DMO on behalf of the Federal Government to raise funds for government spending, including infrastructure and other public projects. The securities also qualify as investments for trustees under the Trustee Investment Act and as government securities under relevant tax laws, while banks can use them as liquid assets when calculating their liquidity ratios.