The Debt Management Office of Nigeria (DMO) has on behalf of the federal government of Nigeria offered for subscription 2 Federal Government of Nigeria (FGN) Savings Bonds. The first is a 2-Year FGN Savings Bond at an 11.041 percent interest rate per annum and would be due on September 14, 2024. In the issuance also is a 3-Year FGN Savings Bonds at 12.041 percent interest rate per annum and would be due on September 14, 2025.
As disclosed by DMO in a publication on its website, the opening date for the bond sale is September 5, 2022, the closing date is September 9, 2022, and the settlement date is September 14, 2022. The Coupon payment dates as stated in the publication are December 14, March 14, June 14, and September 14.
The offer comes at N1000 per unit price subject to a minimum subscription of N5000 and in multiples of N1000 thereafter, having a subscription ceiling of N50 million.
According to DMO, interest on the bond is payable quarterly while a bullet principal repayment will be made at the maturity of the bond.
DMO stated that the bond “qualifies as securities in which trustees can invest under the Trustee Investment Act”.
“Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds, amongst other investors”.
“Listed on The Nigerian Stock Exchange”.
‘’Qualifies as a liquid asset for liquidity ratio calculation for banks”.
The DMO also said that the bond is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria. What this means is that it is a credit-worthy bond and therefore free from credit risk on the part of the investor.
Interested investors are required to contact the stockbroking firms appointed as distribution agents by the debt management office, and are to visit www.dmo.gov.ng for the list of distribution agents.
What You Need to Know
- A bullet bond is a type of bond which has a one-time repayment of principal occurring at its maturity. What this means is that the redemption of the principal by an investor will only be possible at the maturity of the debt instrument. However, according to the DMO, interest will be accrued quarterly.
- Sovereign government bonds are generally free from credit risk as they are backed by the full faith of the government.
