The Debt Management Office (DMO), on behalf of the Federal Government, has announced the offer for a subscription to the November 2022 Federal Government Savings Bond.
A circular issued by the Office indcated that there were two tranches of issuances, namely the 2-year and 3-year savings bonds, with interest rates of 12.492% and 13.492%, respectively.
The interest rates on the November bonds offer showed an increment from 11.382% and 12.382% in October for the 2-year and 3-year Savings Bonds to the 12.492% and 13.492%.
Following the September monetary policy measure by the Central Bank of Nigeria (CBN) which jacked up the Monetary Policy Rate by 400 basis points to 15.5% as part of its step totackle surging inflation rate, the FGN Savings Bond yield has been on the rise.
For instance, between May and November, the interest rate for the 2-year FGN savings bond has risen from 7.934% to 12.492% per annum, while the 3-year bonds interest also increased from 8.934% in May to 13.492% this month.
According to the DMO circular, the opening date for subscription was November 7th, 2022 and the closing date is November 11th, 2022 while the settlement date is November 16th, 2022 and coupon payment dates will be on February 16th, May 16th, August 16th, and November 16th 2023.
The circular further stated that the bonds would be at 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.
A further analysis of the information on the circular showed that that the 2-year FGN savings bond will be due on 16th November 2024, at 12.492% per annum and the 3-year FGN Savings Bond will be due on 16th November 2025, at 13.492% per annum.
The DMO reaffirmed that the bonds were backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria and also qualify as securities in which trustees can invest under the Trustee Investment Act.
Similarly, the FGN bonds also qualify as government securities within the meaning of the Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds, amongst other investors.
