The Federal Government has opened another major investment window as the Debt Management Office (DMO) begins subscription for N1tn worth of Federal Government of Nigeria bonds, with investors required to commit at least N50m to participate.
The offer, which opened on Monday, September 14, consists of two securities. The first is a new 10-year FGN bond valued at N400bn, which will mature in September 2036. The second is a N600bn reopening of a 15-year FGN bond due in 2038, carrying a coupon rate of 15.45 per cent annually.
According to the DMO, the bonds are being offered at N1,000 per unit, subject to a minimum subscription of N50m and additional subscriptions in multiples of N1,000. The settlement date for the offer is September 16, giving eligible investors a limited window to participate in the latest government securities offering.
For investors looking for relatively structured fixed-income opportunities, the bonds come with interest payments made twice a year, while the principal is repaid at maturity. The DMO also stated that the securities are backed by the full faith and credit of the Federal Government and qualify as investments for trustees under the Trustee Investment Act.
The bonds will be listed on the Nigerian Exchange Limited (NGX) and FMDQ OTC Securities Exchange, while also qualifying as liquid assets for banks’ liquidity-ratio calculations. Essentially, FGN bonds allow investors to lend money to the government in exchange for periodic interest, with the funds helping finance government expenditure, infrastructure and other public projects.
source: punch
