The Debt Management Office, DMO, on behalf of the Federal Government, has announced an offer of two Federal Government of Nigeria, FGN, bonds valued at N1 trillion for subscription.
The bonds are being offered at N1,000 per unit, subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.
According to a statement issued by the DMO on Monday in Abuja, the offer comprises a new 10-year FGN bond due in September 2036 and a reopening of a previously issued 15-year bond due in 2038. The opening date for the offer is Sept. 14, while the settlement date is Sept. 16.
The DMO said the new 10-year FGN bond is valued at N400 billion and will mature in September 2036. The second offer is a N600 billion FGN bond due in 2038, with a coupon rate of 15.45 per cent per annum.
The 2038 bond is a 15-year reopening of a previously issued security, meaning that its coupon has already been established.
For the reopened bond, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, in addition to any accrued interest.
The DMO said interest on the bonds would be paid semi-annually, while the principal would be repaid through a bullet payment on the respective maturity dates.
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The DMO said FGN bonds, like other Federal Government securities, are backed by the full faith and credit of the Federal Government and charged upon the general assets of Nigeria.
The securities qualify as investments for trustees under the Trustee Investment Act. They also qualify as government securities under the Company Income Tax Act and Personal Income Tax Act, including provisions relating to exemptions applicable to pension funds and other investors.
According to the DMO, the bonds are listed on the Nigerian Exchange Ltd. and FMDQ OTC Securities Exchange. The securities also qualify as liquid assets for the purpose of calculating banks’ liquidity ratios.
The News Agency of Nigeria reports that FGN bonds are fixed-income debt securities issued by the DMO on behalf of the Federal Government.
Through the instruments, investors lend money to the government, which uses the funds to finance infrastructure, public projects and other government expenditure, including budget deficits.
FGN bonds are generally regarded as low-risk investment instruments because they are backed by the full faith and credit of the Federal Government.
Investors receive periodic interest payments throughout the life of the bond, while the principal amount is repaid at maturity.
The latest N1 trillion offer provides investors with an opportunity to participate in the Federal Government securities market while giving the government access to additional funding through the domestic capital market.
NAN
