This is a “back to school” explanation of FGN Bonds


The tough economic situation in the country has impacted on the private sector so much that laying people off is now so common that it could form a section in many newspapers. The chances of getting new jobs are becoming very slim as many of these companies are packing up.

Funny enough, the government is also suffering from cash problems. Which may be good news, if you are well-informed. The thing is that, unlike private companies that can up and leave at any moment, the government is stuck with its people.

Hence, they have to find money at all costs. This can present great opportunities to earn money from the government, especially by investing in government bonds. This article dissects the different Federal Government bonds and how to invest in them.

What is an FGN Bond?

FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN), usually issed by the Debt Management Office (DMO). It is simply a way of lending with interest to the Federal Government. It has now become more utilized source of FG revenue as a result of current economic challenges. Funds realized from these bonds are used by the FG To finance government fiscal deficits such as the N2.3 trillion 2017 deficit budget.

Why FGN Bonds?

The primary answer is that FGN Bonds are the safest investments you can ever have. It has a 0% risk, meaning investors are guaranteed of receiving both their capital and interest from the FG. You are probably wondering “Why isn’t everybody into it already?!!!” Well, until recently, investing in bonds wasn’t as lucrative as other investments such as the stock exchange, However, the economic meltdown as reduced the profitability of those other investments, while forcing the FG to lend at higher rates.

Types of FGN Bonds

There are different FGN Bonds available, some applicable to everybody, others to some select group of people. Some of them available to Nigerian residents are

  1. FGN Savings Bond: The latest initiative of the FG is meant to “develop a savings culture among Nigerians”. It is issued monthly in tenors of 2 and 3 years, while interest is paid quarterly (every 3 months). Minimum subscription amount is N5,000.00 with additions in multiples of N1,000.00, subject to a maximum of N50,000,000.00. A very good alternative for the Nigerian who has a steady income and wants to develop a savings reserve.
  2. FGN Sovereign Bonds: These are mid/long-term loans to the FG. In return, the FG pays a coupon (interest) and the full debt at the end of the period agreed (tenor). The FG usually sells bonds of 5-, 10-, and 20- year tenors. They are sold through auctions after bids a=have been placed by prospective buyers through Primary Dealer Market Makers (PDMMs). Subscription is a minimum of N10,000.00 and multiple of N1,000.00, thereafter. This is usually a good option for anyone who has a chunk of money now but wants to save it for a future project.

Get more bond articles

What you need to know about FGN Savings Bond

Beginners guide to investing in FGN Bonds

Chacha Wabara

Chacha Wabara is a legal practitioner, blogger and fitness coach. She has over 5 years experience in blogging and freelance writing. She has written several articles and research work over the years as a freelance contributor. She joins Nairametrics as Our News and Analysis Lead.

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