The Debt Management Office (DMO), on behalf of the Federal Government of Nigeria, will on June 22 this year reopen two FGN Bonds to raise a combined N1.2 trillion from an auction as part of the government’s domestic borrowing programme aimed at funding budgetary obligations and managing public debt.
The Office, in its offer circular published on Monday, June 15, on its website indicated that it would offer N600 billion each in a 10-year and a 20-year bond re-opening with settlement scheduled for next Tuesday, June 24.
The offer circular reflected that the N600 billion would be offered in the 22.60% FGN JAN 2035 (10-year re-opening) and the other N600 billion would be offered in the 16.2499% FGN APR 2037 (20-year re-opening), and successful bidders would pay a price corresponding to the yield-to-maturity that clears the auction volume, plus any accrued interest on the instrument.
According to the DMO, subscriptions are priced at N1,000 per unit, with a minimum investment of N50,001,000 and in multiples of N1,000 thereafter. Interest payments will be paid twice in a year, while principal is repaid in full in one lump sum at maturity.
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The Office clarifies that FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria, making them among the safest domestic investment instruments and that listed on the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, providing secondary market liquidity for investors.
In addition, all FGN Bonds qualify as liquid assets for banks’ liquidity ratio calculations and are exempt from certain taxes for pension funds and other qualifying investors under the Companies Income Tax Act (CITA) and Personal Income Tax Act (PITA), and also qualify as securities in which trustees may invest under the Trustee Investment Act.
