The Debt Management Office of Nigeria (DMO) has re-opened 3 previously issued Federal Government of Nigeria (FGN) bonds for subscription by auctions. The first is a N75 billion – 10-Year re-opening FGN Bond at a 13.53 percent semi-annual interest rate and would be due in March 2024. The second is the 10-Year re-opening of a N75 billion FNG Bond at a 12.50 percent interest rate semi-annually and would be due in April 2032. The subscription offer also includes a N75 billion bond auction with a 20-year re-opening at a 13 percent semi-annual interest rate.
As disclosed by DMO in a publication on its website, the opening date for the bond auction is August 15, 2022, and the settlement date is August 17, 2022. The offer comes at N1000 per unit price subject to a minimum subscription of N50,001,000 and in multiples of N1000 thereafter.
According to DMO, interest on the bond is payable semi-annually while a bullet 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 Limited and FMDQ OTC Securities Exchange”.
‘’Qualifies as a liquid asset for liquidity ratio calculation for banks.”
“for Re-openings of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.”
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 any of the Primary Dealer Market Makers (PDMMs): Access Bank Plc; First Bank of Nigeria Ltd; Standard Chartered Bank Nigeria Ltd; Citibank Nigeria Ltd; First City Monument Bank Plc; United Bank for Africa Plc; Coronation Merchant Bank Ltd; FSDH Merchant Bank Ltd; Zenith Bank Plc. Ecobank Nigeria Ltd; Guaranty Trust Bank Plc; FBNQuest Merchant Bank Ltd and; Stanbic IBTC Bank Plc.
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.
- Sovereign government bonds are generally free from credit risk as they are backed by the full faith of the government.
