The Debt Management Office (DMO) has announced the opening of the subscription window for the Federal Government of Nigeria Savings Bonds (FGN Savings Bonds) for January 2025. The offer, available from January 13 to January 17, 2025, provides an attractive investment opportunity for both individuals and institutions.
Bond Details and Interest Rates
This month’s FGN Savings Bond offering includes two options:
- A two-year bond maturing on January 22, 2027, with an interest rate of 17.235%.
- A three-year bond maturing on January 22, 2028, offering a higher yield of 18.235%.
Investors can purchase each bond unit at N1,000, with a minimum investment requirement of N5,000. Subsequent investments can be made in multiples of N1,000, up to a maximum of N50 million.
The settlement date for this issuance is January 22, 2025, and the first quarterly interest payment is scheduled for April 22, 2025. Subsequent payments will follow on July 22, October 22, and January 22 annually.
Rising Interest Rates Drive Higher Yields
The three-year bond’s yield of 18.235% marks a significant increase from the 12.033% offered in January 2024, reflecting a sharp rise of 6.20 percentage points within a year. This uptick is largely due to the Central Bank of Nigeria’s (CBN) tightening of monetary policy, which began in February 2024.
In November 2024, the CBN raised the Monetary Policy Rate by 25 basis points to 27.50% to curb inflation, which had reached 33.88%. The sustained policy tightening has boosted the appeal of longer-term securities, attracting both domestic and foreign investors seeking competitive returns.
Results from December’s Bond Auction
At the FGN bond auction held on December 16, 2024, the government offered two securities:
- The 19.30% FGN APR 2029, a five-year bond.
- The 18.50% FGN FEB 2031, a seven-year bond.
The five-year bond garnered N67.457 billion in total bids, with N51.857 billion successfully allotted at a marginal rate of 21.14%. Meanwhile, the seven-year bond attracted a robust N211.363 billion in bids, of which N159.287 billion was allotted at a marginal rate of 22.00%.
In total, the Federal Government raised N211.144 billion from the auction, reflecting continued investor confidence in Nigeria’s bond market amidst dynamic economic conditions.
Investment Outlook
The FGN Savings Bonds offer a secure and consistent return for investors while contributing to the country’s economic stability. As interest rates remain high, these bonds are expected to remain an attractive investment option, particularly for those seeking steady income in an inflationary environment. Investors are encouraged to take advantage of this opportunity to diversify their portfolios and secure competitive returns.
