The Debt Management Office (DMO), on behalf of the Federal Government of Nigeria (FGN), has announced an offer for subscription by auction of two re-opened Federal Government of Nigeria (FGN) bonds totaling N300 billion.
The bonds, which are part of the government’s domestic borrowing strategy, are aimed at financing budget deficits and supporting infrastructure development.
The auction is scheduled for March 24, 2025, with a settlement date of March 26, 2025.
The DMO is offering two bonds for subscription:
- N200,000,000,000.00 – 19.30% FGN APR 2029 (5-Year Re-opening)
- N100,000,000,000.00 – 19.89% FGN MAY 2033 (9-Year Re-opening)
Both bonds are re-openings of previously issued bonds, meaning the coupon rates have already been set. Investors will pay a price corresponding to the yield-to-maturity bid that clears the auction volume, plus any accrued interest on the instrument.
Key Features of the Bonds
- Units of Sale: The bonds are sold at N1,000 per unit, with a minimum subscription of N50,001,000 and multiples of N1,000 thereafter.
- Interest Payment: Interest is payable semi-annually, providing a steady income stream for investors.
- Redemption: The bonds will be repaid in full (bullet repayment) on their respective maturity dates.
- Status: The bonds qualify as securities in which trustees can invest under the Trustee Investment Act. They also qualify as government securities under the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), making them tax-exempt for pension funds and other investors. Additionally, the bonds are listed on the Nigerian Exchange Limited (NGX) and FMDQ OTC Securities Exchange, ensuring liquidity and transparency.
Benefits to Investors
- Attractive Yields: With interest rates of 19.30% for the 5-year bond and 19.89% for the 9-year bond, these securities offer competitive returns compared to other fixed-income instruments in the market.
- Tax Exemption: The bonds are exempt from taxes, making them particularly attractive to pension funds and other institutional investors seeking tax-efficient investment options.
- Liquidity: As listed securities, the bonds can be easily traded on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, providing investors with liquidity and flexibility.
- Security: Backed by the full faith and credit of the Federal Government of Nigeria, the bonds are considered low-risk investments. They are also charged upon the general assets of Nigeria, further enhancing their security.
Auction Process
The auction will be conducted on March 24, 2025, with successful bidders required to settle their purchases by March 26, 2025.
Investors are encouraged to submit their bids through authorized primary dealers, who act as intermediaries between the DMO and the investing public.
The issuance of these bonds is part of the Federal Government’s broader strategy to manage the national debt profile while providing attractive investment opportunities for domestic investors.