DMO offers June 2022 FGN savings bond for subscription

The Debt Management Office (DMO), on behalf of the Federal Government has announced the offer for subscription of the June 2022 Federal Government Savings Bond to investors.

This disclosure is contained in a circular issued by the DMO and can be seen on its website, noting that there are 2-year and 3-year savings bonds.

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A breakdown of the bonds show that the 2-year FGN savings bond will be due on June 15, 2024, at 8.205% per annum and the 3-year FGN Savings Bond which will be due on June 15, 2025, at 9.205% per annum.

Highlights

Opening Date – June 6, 2021
Closing Date – June 10, 2021
Settlement Date – June 15, 2021
Coupon Payment Dates –September 15, December 15, March 15, June 15
UNITS OF SALE: N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50,000,000.

The Bond Qualifies as securities in which trustees can invest under the Trustee Investment Act.

It also 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.

A month-on-month comparison shows that the rates for the two tranches increase slightly, compared to the  5.522% and 6.522% offered for the 2-year FGN savings bond due April 2023, and 3-year FGN Savings bond due April 2024, respectively.
The interest rate for the latest offer is higher than the offer announced in the previous month. This could be a move to attract more investors to subscribe to the securities.
The increase in FGN bond interest rates is following the hawkish move of the CBN in raising the monetary policy rate (MPR) by 150 basis points in May 2022 to 13%. The interest rate hike has also reflected in the domestic debt market, given the 47% oversubscription of the CBN treasury bill last month after the apex bank increased stop rates to as high as 6.49%.
This is evidently seen in the equities market as investors sell-off their shares in order to buy into less risky assets, amid high bond yields.
The FGN Savings Bond is an investment product issued through the Debt Management Office (DMO) on behalf of the Federal Government.