The Debt Management Office (DMO) on behalf of the Federal Government of Nigeria has offered up for subscription N150 billion worth of FGN bonds by auction in November 2021.
This is according to the disclosure made by the agency on its website. The bonds were listed in three tranches, each worth N50 billion.
N50 billion – 12.50% FGN JAN 2026 (10-Yr Re-opening)
N50 billion – 16.2499% FGN APR 2037 (20-Yr Re-opening)
N50 billion- 12.98% FGN MAR 2050 (30-Yr Re-opening)
The auction date for these bonds is set for the 17th of November 2021, while the settlement date is set for the 19th of November 2021.
Summary of the offer
Issuer: Federal Government of Nigeria (“FGN”)
Units of Sale: N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.
Interest rate: For Re-openings of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.
Interest payment: Payable semi-annually.
Redemption: Bullet repayment on the maturity date.
Status:
- Qualifies as securities in which trustees can invest under the Trustee Investment Act.
- Qualifies as 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.
- Listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.
- All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.
It is important to know that FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.
What you should know about bonds
A bond is a fixed income instrument that represents loans made by an investor to a borrower. The borrower is usually corporate or government; in this case the Federal Government of Nigeria.
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.
In case you missed it
The Debt Management Office (DMO) issued a similar bond worth N150 billion for subscription by auction in October 2021. The bonds were also listed in three tranches with 12.50%, 16.2499% and 12.98% for the 10 year, 20 year and 30 year re-opening respectively.
