The Federal Government of Nigeria, through the Debt Management Office (DMO), has announced the subscription window for the Federal Government Savings Bonds (FGN Savings Bonds) for January 2025.
This initiative invites both individual and institutional investors to participate from January 13 to January 17, 2025.
The bond offering for January 2025 features two options: a two-year savings bond maturing on January 22, 2027, with an interest rate of 17.235%, and a three-year bond maturing on January 22, 2028, offering 18.235%.
Each bond unit is priced at N1,000, with a minimum subscription requirement of N5,000. Investors can increase their investment in multiples of N1,000, up to a maximum limit of N50 million.
The settlement date for successful subscriptions is January 22, 2025, with the first quarterly coupon payment scheduled for April 22, 2025, followed by payments on July 22, October 22, and January 22 annually.
This offering provides Nigerians with an opportunity to invest in FGN Savings Bonds, promoting secure and consistent returns.
Rising interest rates drive higher yields
The Federal Government of Nigeria’s (FGN) three-year savings bond for 2025 offers an interest rate of 18.235%, a substantial increase from the 12.033% rate recorded in January 2024—representing a sharp rise of 6.20 percentage points in just one year.
This adjustment reflects the Central Bank of Nigeria’s (CBN) consistent efforts to tighten monetary policy since February 2024.
The increased appeal of longer-term securities comes amid Nigeria’s rising interest rate environment.
- In November 2024, the CBN raised its Monetary Policy Rate by 25 basis points, from 27.25% to 27.50%, as part of its strategy to combat inflation, which stood at 33.88% during the month.
- This move followed six consecutive rate hikes by the Monetary Policy Committee aimed at managing inflationary pressures and stabilizing economic conditions.
CBN’s efforts to tackle inflation and stabilize the foreign exchange market have significantly increased the appeal of Nigerian bonds.
Higher yields have drawn interest from foreign portfolio investors (FPIs) seeking competitive returns, further solidifying Nigeria’s position as a viable destination for bond investments.
Results from the December FGN bond auction
In a recent auction held on December 16, 2024, the Federal Government of Nigeria offered two bonds: the 19.30% FGN APR 2029 and the 18.50% FGN FEB 2031.
- Both securities are set to settle on December 18, 2024, with maturity dates of April 17, 2029, and February 21, 2031, respectively.
The 5-year bond attracted a total subscription of N67.457 billion from 44 bids, with 30 bids successfully awarded.
- A total of N51.857 billion was allotted at a marginal rate of 21.14%, with bids ranging from 19.30% to 22.14%.
Conversely, the 7-year bond received a robust subscription of N211.363 billion, with a remarkable 116 bids submitted.
- Out of the total bids, 68 were successful, resulting in N159.287 billion allotted at a marginal rate of 22.00%. These bids ranged from 19.00% to 24.00%.
In total, the government raised N211.144 billion from this auction, combining the amounts from both bonds and reflecting strong investor interest in Nigerian government securities amidst dynamic economic conditions.
