Wednesday, October 5, 2022

Investing in FG’s securities has no risk, profitable: DMO

The Debt Management Office (DMO) says Nigerians should invest in the federal government’s securities.

• May 31, 2022
DMO DG Patience Oniha
DMO DG, Patience Oniha

The Debt Management Office (DMO) says Nigerians should invest in the federal government’s securities.

According to the DMO, they are profitable and risk-free.

In an interview on Tuesday, the director-general of DMO, Patience Oniha, said the securities offered attractive investment opportunities, apart from raising funds to finance government projects.

“They are backed by full faith and credit of the federal government of Nigeria, and are default risk-free,” she said.

Ms Oniha noted that the federal government, through the DMO, issues the bonds and makes periodic interest payments to the investors. At the same time, the principal is paid at the end of each tenor.

“The federal government has various investment platforms like the FGN Bond, FGN Savings Bond, Treasury Bills, the Green Bond, the Sovereign Sukuk and Eurobond,” she added.

Ms Oniha explained that the government’s ecurities also contributed to developing the domestic capital market, adding that they served as a benchmark for other private institutions to issue their securities.

“They also attract foreign investors into the domestic financial market, to refinance maturing domestic debt and to diversify sources of funding for the federal government,” stated Ms Oniha. “You can use them as collateral to obtain loans from banks and other financial institutions, and they help in diversification of investment portfolio.”

She further mentioned that the federal government’s bond “is the flagship” and the longest of the existing federal government’s securities.

“It offers medium-term to long term investments, from five years to seven years, to 10 years, 20 years and 30 years. It is offered every month, with a minimum subscription of N50 million, and in multiples of N1000 after that, and coupon payments are made every six months,” she noted.

The federal government’s savings bond is issued monthly with a minimum subscription of N5,000 and in multiples of N1000, subject to a maximum of N50 million.

The DMO boss further stated that the Eurobond was issued in dollars and designed to provide exposure to foreign investment that stayed in the country.

Ms Oniha described the Sovereign Sukuk as Sharia-compliant security that represents the owner’s interests in an asset or pull of assets.

(NAN)

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