"N1,000 Per Unit": FG Opens N350bn Bond Auction, Invites Nigerians to Invest
- The DMO is reopening two federal government bonds for auction, totalling N350 billion, with subscriptions available at N1,000 per unit
- The bonds offer semi-annual interest payments and principal repayment at maturity, with a five-year bond offering 19.3% per annum
- The auction is scheduled for April 28, with settlement by April 30, and investors are advised to participate
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology, Banking and the Economy.
The Debt Management Office (DMO) has announced plans to reopen two federal government bonds for auction, with a total value of N350 billion. The bonds will be available for subscriptions at N1,000 per unit.
These bonds are designed for retail investors, offering guaranteed quarterly interest payments and the return of the principal at maturity.
Source: UGC
Bond subscription at N1,000 per unit
According to a statement released on Wednesday, April 23, the auction will take place on April 28, with the settlement scheduled for April 30.
The DMO has outlined two bond tranches: the first, worth N200 billion, is a five-year savings bond maturing in April 2029, offering an annual interest rate of 19.3%.
The second tranche, valued at N150 billion, is a nine-year savings bond maturing in May 2033, with an interest rate of 19.89% per annum.
The bonds will be priced at N1,000 per unit, with a minimum subscription of N50,001,000, and additional subscriptions in multiples of N1,000.
The DMO said:
“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 agency also mentioned that the interest on the bonds will be paid twice a year, with the principal being repaid in a lump sum on the maturity date.
Status of bond offer
- Qualifies as securities in which trustees can invest under the Trustee Investment Act can invest
- Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PIA”) for Tax Exemption for pension funds amongst other investors.
- Listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange.
- All FGN Bonds qualify as liquid assets liquidity ratio calculation for banks.
DMO explained that the FGN Bonds are backed by the full faith and credit of the federal government of Nigeria and are charged upon the general assets of Nigeria.
The agency advised all interested investors to reach out to primary dealer market makers (PDMMs).
In March, DMO reopened two Federal Government bonds for auction, valued at N300 billion, available for subscriptions at N1,000 per unit.
Nigeria’s dollar bond becomes worst-performing
Earlier, Legit.ng reported that Nigeria's dollar bonds were among the poorest performers in emerging markets, with its sovereign-risk premium reaching an eight-month high.
Some investors may worry about a similar outcome in Nigeria, where the impact of President Bola Tinubu's policies has led to hardship for the people.
According to Citigroup strategists Alexander Rozhetskin and Luis Costa, political instability and a challenging reform environment are influencing the pricing of Nigerian bonds.
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Source: Legit.ng
