The Federal government (FG) on Wednesday, 20, November 2019, through the Debt Management Office (DMO), would offer fresh Federal Government Bonds (FGN Bonds) valued at N150 billion for subscription.

According to the offer circular released to the public, the DMO disclosed that the bonds to be offered would include a 5-year N50 billion FGN APR 2023 bond at 12.75%, a 10-year N50 billion FGN APR 2029 bond at 14.55% and a 30-year N50 billion FGN APR 2049 bond at 14.80%. The settlement date for the subscription is scheduled for Friday, November 22, 2019.

The DMO disclosed that the FGN bonds, which qualify as securities, which trustees can invest under the Trustee Investment Act, also qualify as liquid assets for liquidity ratio calculation for banks. The bonds are to be listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.

FGN Bonds

Investments in FGN Bonds as stated in the circular by DMO qualify for tax exemption to pension funds and other investors.

“Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds, amongst other investors,” DMO offer Circular stated.

The bonds are to be offered at N1,000 per unit, subject to a minimum subscription of N50,001,000, and in multiples of N1,000, thereafter. The bonds’ interests are to be semi-annually, and bullet repayments made on the maturity date. The DMO reserves the right to alter the amount allotted in response to market conditions

Interested in buying? The DMO advised interested investors to contact the following stockbroking firms which are its appointed distribution agents.

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(READ MORE: FGN Bonds record first undersubscription in 2 years)

  • Access Bank Plc;
  • First Bank of Nigeria Limited;
  • Standard Chartered Bank Nigeria Limited;
  • Citi Bank Nigeria Limited;
  • First City Monument Bank Plc;
  • United Bank for Africa Plc;
  • Coronation Merchant Bank Limited;
  • FSDH Merchant Bank Limited;
  • Zenith Bank Plc;
  • Ecobank Nigeria Limited;
  • Guaranty Trust Bank Plc;
  • FBNQuest Merchant Bank Limited; and
  • Stanbic IBTC Bank Plc.

However, the DMO will also make allotments on a non-competitive basis for the additional sum of N25 Billion 12.75% FGN APR 2023, N20 Billion 14.55% FGN APR 2029 and N5 Billion 14.80% FGN APR 2049.

Standard chartered

Understanding Bonds: A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and the borrower that includes the details of the loan and its payments. A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower.

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