Article Summary
- Retail savings bond product was introduced by the Debt Management Office (DMO) on behalf of the Federal Government in 2017 to democratize its activities in the bond market.
- The introduction was to make it easily accessible to Nigerians to ensure continuous development of the domestic market and bridge the infrastructure deficit which has been a constraint to economic growth.
- The DMO uses the FGN bond benchmark yield curve to price the savings bond to ensure that retail investors earn comparable returns.
Nigerian Exchange Limited (NGX) has disclosed that the total allotments for FGN Savings Bonds rose to N5.06 billion in the first five months of 2023.
The Divisional Head of Capital Markets at NGX, Jude Chiemeka, made this known during the NGX Savings Bond webinar 2023, organized by the Exchange in collaboration with Optimus by Afrinvest with support by the Debt Management Office (DMO) and CSL Stockbrokers.
Why introduction of savings bond
Chiemeka noted that the webinar was aimed at creating more awareness of the benefits of FGN Savings Bonds to the investing public especially the retail segment of the market as this would encourage participation in investments and further enhance financial inclusion in the country.
He stated that the retail savings bond product was introduced by the Debt Management Office (DMO) on behalf of the Federal Government in 2017 to democratize its activities in the bond market.
The introduction according to him was to make it easily accessible to Nigerians to ensure continuous development of the domestic market and bridge the infrastructure deficit which has been a constraint to economic growth.
Upward trend
He noted that the activities in the FGN Savings Bonds market have remained on an upward trend in the current year.
- “FGN Savings Bonds market has remained on the upward trend in the current year (from January to May) with allotments at an average of N1.01 billion (Total allotments from January – May stands at N5.06 billion). However, there remains an opportunity for further participation by the investing public.
- As inflation remains unrelentingly on the upward trajectory (Now at 22.22% as of May) the yields on FGN Savings Bond which are in double digits offer an opportunity for investors to taper negative real interest rates,” he said.
He thereafter said that the Exchange remains keen to provide an efficient, liquid, and transparent market for investors and businesses in Africa, to access capital and build wealth.
Chiemeka added that the Exchange continues to collaborate with all market stakeholders for the collective growth and development of the capital market in Nigeria.
The Director-General, DMO, Ms Patience Oniha, represented by the Director, Market Development Department, DMO, Monday Usiade, revealed during the webinar that FG had successfully raised N50.2 billion from about 35,000 subscribers so far.
Commending the NGX for its role in enlightening retail investors of the opportunity that exists in fixed income securities market, especially concerning the FGN savings bond, the DG said that the DMO uses the FGN bond benchmark yield curve to price the savings bond to ensure that retail investors earn comparable returns.
