The Federal Government of Nigeria (FGN) has officially issued a $500 million domestic dollar bond, opening for subscription on August 19, 2024.
This bond, part of the government’s financing initiatives, will carry a 9.75% per annum interest rate and is set to mature in 2029.
The auction for this bond will remain open until August 30, 2024, giving investors a sufficient window to participate in this offering.
The settlement date, when investors will have their purchases confirmed and interest will begin accruing, is set for September 6, 2024.
Details of the Bond Offering
This bond issuance marks a significant step in Nigeria’s financial strategy, providing an opportunity for investors both within and outside the country.
The bond is structured as a five-year investment, with coupon payments made semi-annually.
Investors can purchase units at a minimum of $1,000 each, with an initial minimum subscription set at $10,000 (10 units). Subsequent investments can be made in multiples of $1,000.
The redemption of the bond will occur through a bullet repayment at the end of the five-year term, ensuring that investors receive their principal in full upon maturity.
The bond is open to a wide range of investors, including Nigerian residents, individuals with savings abroad, members of the Nigerian diaspora, and Qualified Institutional Investors.
The bond qualifies as a security under several legal frameworks, including the Trustee Investment Act and the Pension Reform Act, allowing trustees and Pension Fund Administrators to invest in it.
Additionally, it qualifies as a government security under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), offering tax exemption benefits for pension funds.
This bond is part of the government’s broader strategy to tap into domestic and diaspora investments, providing a secure and attractive investment vehicle with the backing of the full faith and credit of the Federal Government of Nigeria.
The bond will be listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange Limited, enhancing its liquidity and accessibility for investors.
United Capital Plc is the lead issuing house and coordinator, with Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited also serving as issuing houses.
The bond is further supported by a network of primary dealer market makers and receiving banks, including Access Bank Plc, Citibank Nigeria Ltd., and Guaranty Trust Bank Ltd., among others.
What you should know
- Nairametrics earlier reported that the Federal Government of Nigeria planned to issue its dollar-denominated domestic bond on Monday, as it hoped to raise $500 million from local and foreign investors.
- Dr Gbadebo Adenrele, Managing Director of Investment Banking, at United Capital Group, disclosed this during a hybrid roadshow with investors organised by the Debt Management Office (DMO).
- The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, also stated that the $500m domestic dollar bond will enhance external reserves and help stabilize the foreign exchange situation in the country.
- The Nigerian government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction.