The Debt Management Office (DMO) on behalf of the Federal government has offered for subscription N150 billion worth of FGN bonds by auction.
This is according to a disclosure published on the website of the agency. The bonds were listed in three tranches, each with N50 billion.
N50 billion – 12.50% FGN Jan 2026 (10-yr Re-opening)
N50 billion – 16.2499% FGN Apr 2037 (20-yr Re-opening)
N50 billion – 12.98% FGN Mar 2050 (30-yr Re-opening)
Auction Date – October 20, 2021
Settlement Date – October 22, 2021
Summary of offer
Issuer: Federal Government of Nigeria (“FGN”)
Units of Sale: N1,000 per unit subject to a minimum subscription of N50 million 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 accrued interest from the original issue date.
Interest payment: Payable semi-annually.
Redemption: Bullet repayment on the maturity date.
It qualifies as securities in which trustees can invest under the Trustee Investment Act
It also 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
It is listed on the Nigerian Stock Exchange
All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks
It is worth noting that 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
What you should know about bonds
A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).
A bond could be thought of as an I.O.U. between the lender and the borrower that includes the details of the loan and its payments.
A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower.
In case you missed it
The DMO had issued a similar bond worth N150 billion for subscription by auction in April 2021. The bonds were also issued in three tranches with 16.2884%, 12.5%, and 9.8% for the 10-year reopening bond, 15-year, and 25-year reopening bond respectively.