Monday, September 25, 2023

DMO auctions four FG bonds valued at N360 billion

The Debt Management Office (DMO) has offered four federal government bonds valued at N360 billion for a subscription via auction at N1,000 per unit.

• January 25, 2023
DMO DG Patience Oniha
DMO DG, Patience Oniha

The Debt Management Office (DMO) has offered four federal government bonds valued at N360 billion for a subscription via auction at N1,000 per unit.

According to a circular by the DMO, the bonds on offer are reopening of a 10-year, Feb. 2028 FGN bond, valued at N90 billion, at an interest rate of 13.98 per cent per annum.

The 15-year, April 2032 FGN bond is reopening, valued at N90 billion, at a 12.50 per cent rate per annum.

The third is the reopening of a 20-year, April 2037 FG bond, valued at N90 billion, at a 16.24 interest rate per annum. The last offer is the reopening of a 30-year, April 2049 FG bond valued at N90 billion at an interest rate of 14.80 per cent per annum.

“They are offered at N1,000 per unit with a minimum subscription of N50 million and in multiples of N1,000 thereafter. For re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned plus any accrued interest rate,” the DMO stated. “Interest is payable semi-annually while the bullet repayment (principal sum) is made on maturity.”

It added that the FG bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

“They also qualify as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds amongst other investors. They are listed on the Nigerian Stock Exchange Limited and FMDQ OTC Securities Exchange Limited,” it explained. “All FGN bonds qualify as liquid assets for liquidity ratio calculation for banks.”

It added that they were backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria. 

The government securities like FG bonds, savings bonds and Sukuk bonds constitute a local component of government borrowings.


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