The Debt Management Office (DMO) on behalf of the Federal Government of Nigeria has offered up for subscription N100 billion worth of FGN bonds by auction in December 2021.
This is according to the disclosure made by the agency on its website. The bonds were listed in two tranches, each worth N50 billion.
N50 billion – 12.50% FGN JAN 2026 (10-Yr Re-opening)
N50 billion – 16.2499% FGN APR 2037 (20-Yr Re-opening)
The auction date for these bonds is set for the 15th of December 2021, while the settlement date is set for the 17th of December 2021.
Summary of the offer
N1,000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.
INTEREST RATE: For Re-openings of previously issued bonds,(where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.
INTEREST PAYMENT: Payable semi-annually
REDEMPTION: Bullet repayment on the maturity date
STATUS:
- Qualifies as securities in which trustees can invest under the Trustee Investment Act.
- Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds amongst other investors.
- Listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.
- All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.
SECURITY: FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.
VITAL NOTES ON BONDS
- A bond is a fixed-income security that symbolizes a lender’s loan to a borrower. In most cases, the borrower is a corporation or government, such as the Federal Government of Nigeria in this case.
- A bond can be regarded as a promissory note between the lender and the borrower that outlines the loan’s terms and installments.
- A bond has an end date when the principle of the loan is required to be paid to the bond owner, as well as terms for the borrower’s variable or fixed interest payments.
