The Federal Government of Nigeria (FGN), through the Debt Management Office (DMO), has announced plans to raise N350 billion in its February 2025 bond auction. This marks a decrease from the N450 billion offered in the January 2025 auction. The auction, scheduled for February 24, 2025, will involve the reopening of two existing bonds: the 19.30% FGN April 2029 bond and the 18.50% FGN February 2031 bond, with offer sizes of N200 billion and N150 billion, respectively.
Auction Details and Investment Terms
The bonds are available in units of N1,000, with a minimum subscription requirement of N50,001,000. Subsequent investments must be in multiples of N1,000. Since these are reopenings of existing bonds, the coupon rates remain fixed at 19.30% for the 5-year bond and 18.50% for the 7-year bond. However, the final price for successful bidders will depend on the yield-to-maturity bid that clears the auction volume.
Investors will also be required to pay accrued interest from the last coupon payment date to the settlement date, which is set for February 26, 2025. Interest payments will be made semi-annually, providing investors with regular returns. Upon maturity, the principal will be repaid in full through a bullet repayment, ensuring investors receive the total face value of their investments at once.
Benefits for Investors
The FGN bonds offer several advantages, including tax exemptions under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA). This makes them particularly attractive to pension funds and other institutional investors seeking stable, tax-efficient returns. Additionally, the bonds qualify as trustee investments under the Trustee Investment Act, allowing pension funds and insurance companies to invest with confidence.
Listed on both the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, the bonds provide liquidity for investors who may wish to trade their holdings in the secondary market. For commercial banks, the bonds qualify as liquid assets for liquidity ratio calculations, helping them meet regulatory requirements while earning interest income.
Government Backing and Security
The bonds are backed by the full faith and credit of the Federal Government of Nigeria, ensuring minimal credit risk for investors. This guarantee, coupled with the bonds’ listing on major exchanges, underscores their security and appeal to a broad range of investors.
How to Participate
Interested investors can participate in the auction through authorized Primary Dealer Market Makers (PDMMs), including major financial institutions such as Access Bank, First Bank of Nigeria, Stanbic IBTC Bank, Citibank Nigeria, Guaranty Trust Bank, and Zenith Bank. These institutions facilitate the auction process, enabling investors to access this secure and structured investment opportunity.
The February 2025 bond auction is part of the government’s strategy to raise long-term funds for national expenditure and economic development. By reopening existing bonds, the FGN provides investors with a reliable investment vehicle while efficiently managing its debt obligations.
