FGN Bonds record first undersubscription in 2 years
Patience Oniha, Director-General, Debt Management Office

The Federal Government bond for the month of April has been set at N60 billion, the Debt Management Office (DMO) disclosed, adding that it has been authorised to receive applications on behalf of the Federal Government.

The debt office said the N60bn bonds consisted of a re-opening of N40 billion five-year bond at a rate of 12.75 percent and two new issues of a N40 billion 10-year bond and N20 billion 30-year bond.

Nairametrics learnt that the bonds would be auctioned on April 24th, 2019, and would be settled on April 26.

Also, bullet repayment of the redemption would be made on the maturity date, while interest on the bonds would be payable semi-annually.

READ MORE: Nigeria’s total debt profile now N24.3tn – DMO

Note that for the re-opening of previously issued bonds (where the coupon is already set), successful bidders usually pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.

“The bonds are offered at N1,000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.

“They qualify as securities in which trustees can invest under the Trustee Investment Act as they are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

“The bonds also qualify as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds among other investors. They are listed on the Nigerian Stock Exchange and the FMDQ OTC Securities Exchange.”

According to the DMO, the bonds qualify as liquid assets for liquidity ratio calculation for banks.

The banks that have been accredited as dealers for the transaction are:

  1. Access Bank Plc,
  2. First Bank of Nigeria Limited,
  3. Standard Chartered Bank Nigeria Limited,
  4. Citibank Nigeria Limited,
  5. First City Monument Bank Plc,
  6. United Bank for Africa Plc,
  7. Coronation Merchant Bank Limited,
  8. FSDH Merchant Bank Limited,
  9. Zenith Bank Plc,
  10. Ecobank Nigeria Limited,
  11. Guaranty Trust Bank Plc,
  12. FBNQuest Merchant Bank Limited and
  13. Stanbic IBTC Bank Plc.

Three months on, investors continue to oversubscribe FGN Bonds

The FGN Bonds that were offered to investors for the month of March was oversubscribed by N140 billion, according to the Debt Management Office (DMO). The DMO disclosed that though the initial offer was N100 billion bonds, the total subscription received was N240.6bn.

Deal book 300 x 250

Oversubscription in previous months: DMO had also recorded over-subscription of the FGN bonds in January and February 2019. According to information contained on the agency’s website, the initial value of the January bond was N150 billion, even though investors over-subscribed by N197 billion.

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