Abuja: The Debt Management Office (DMO), on behalf of the Federal Government, has announced an offer of two FGN bonds valued at one trillion Naira for subscription at N1,000 per unit. According to a statement by the DMO on Monday, the first offer is a new, 10-year FGN bond, due September 2036, and valued at N400 billion. The second offer is a 2038 FGN bond valued at N600 billion, with an interest rate of 15.45 percent per annum (15-year re-opening).
According to News Agency of Nigeria, the opening date for the offer is set for September 14, with the settlement date on September 16. The FGN bonds are offered at N1,000 per unit, subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter. 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. Interest is payable semi-annually, with bullet repayment on the maturity date.
The DMO emphasized that FGN bonds, like all other Federal Government securities, are backed by the full faith and credit of the Federal Government and charged upon the general assets of Nigeria. These bonds qualify as securities in which trustees can invest under the Trustee Investment Act and are considered government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for exemption for pension funds, among other investors. They are listed on the Nigerian Exchange Ltd. and FMDQ OTC Securities Exchange, and they qualify as liquid assets for liquidity ratio calculation for banks.
The News Agency of Nigeria reports that Federal Government of Nigeria (FGN) Bonds are fixed-income debt securities issued by the DMO on behalf of the Federal Government. They allow investors to lend money to the government to finance infrastructure, public projects, and national budget deficits. Because they are backed by the full faith and credit of the Federal Government, FGN bonds are considered risk-free debt instruments with zero default risk on principal and interest payouts.