The Debt Management Office (DMO) has announced plans by the Federal Government to raise N450 billion through its January 2025 bond auction scheduled for next Monday, January 27, 2025
The debt instrument auction is part of efforts by the government to bridge the fiscal deficit gap in the 2025 budget with a view to meeting its funding obligations, particularly in infrastructure projects, and creating investment opportunities for institutional and individual investors.
According to the information from the DMO, the bond auction will feature a combination of reopened and newly issued bonds, and the settlement for the auction is set for January 29, 2025, to ensure that successful bidders acquire the bond with bright prospects for interest
The Office listed the offer as comprising three categories of bonds. The first is a five-year bond with a 19.30 per cent coupon rate, originally issued in April 2029, through which the government is targeting N100 billion while the second is a seven-year tenored bond, first issued in February 2031 18.50 per cent coupon rate, with a target of N150 billion. The third is a newly issued ten-year bond, the FGN January 2035 bond, through which the government intends to raise N200 billion.
- Advertisement -
The DMO stated that the bonds were available in units of N1,000, with a minimum subscription set at N50,001,000. Investors may increase their subscriptions in increments of N1,000, and that the bonds offered semi-annual interest payments, ensuring consistent income for holders, and will be redeemed in full upon maturity, providing a lump-sum repayment.
It added that tax exemptions under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA) were applicable to the bonds, making them attractive to pension funds and other approved investors.
The bonds, which are listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, the are easily accessible and tradable and financial institutions can use them to meet liquidity ratio requirements, as they are recognised as liquid assets.
The bonds are backed by the full faith and credit of the Federal Government of Nigeria, adding a layer of security for investors just as the government guarantee, charged upon the country’s general assets, further enhances the appeal of the bonds as a low-risk investment option.
To participate in the auction, the DMO advised prospective investors to subscribe through authorised Primary Dealer Market Makers such as Access Bank, Zenith Bank, Stanbic IBTC Bank, and United Bank for Africa, which will facilitate the subscription process, guiding interested parties.
Bond issuance is a part of the Federal Government’s strategy to leverage the debt instruments market to address fiscal deficits in yearly budgets and enable it to fund critical infrastructure projects in the face of fiscal whirlwinds in the global economic landscape.
It would be recalled that the Federal Government had, in its FGN Bond Issuance Calendar earlier released, planned to raise up to N1.8 trillion from the bond market in the first quarter (Q1) of this year.
