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The Nigerian government has announced an investment opportunity for savvy investors, offering a $500 million Federal Government of Nigeria (FGN) bond with a minimum subscription of $1,000 per unit. This move aims to attract investors seeking stable returns.
On Monday, the Debt Management Office (DMO) announced details of the bond offer, revealing a five-year domestic dollar bond set to mature in 2029. The bond boasts an attractive interest rate of 9.75 percent per annum, providing investors with a stable return on investment.
According to the DMO, the bond offer will be open for subscription from August 19 to August 30, giving investors a two-week window to participate. The settlement date is slated for September 6, when the bonds will be issued to investors.
‘It is offered at 1,000 dollars per unit subject to a minimum subscription of 10,000 dollars (10 units), and in multiples of 1,000 dollars thereafter,’ DMO said.
‘Coupon payment is semi-annually, while bullet repayment (principal sum) is on the maturity date.’
Investors eligible to participate in the bond offer include: Individuals based in Nigeria, Nigerians with international savings, Members of the Nigerian diaspora worldwide, Qualified institutional investors seeking investment opportunities.
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The DMO has outlined a secure payment process for the bond offer, mandating that all payments be made through electronic transfers within the banking system. This approach ensures that funds are received safely and accurately into the designated accounts.
‘No cash deposits will be accepted under this transition, except where such cash deposits have been made into the domiciliary accounts for not less than 30 days prior to the date of offer.’
The DMO has assured investors that the dollar-denominated FGN bond carries the full backing of the federal government of Nigeria, ensuring its creditworthiness. Additionally, the Central Bank of Nigeria (CBN) has accorded it liquid asset status, further solidifying its security.
‘It qualifies as securities in whch trustees can invest under the Trustee Investment Act,’ the agency said.
‘Qualifies as securities in which the Pension Fund Administrators can invest under the Pension Act.
‘Qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds among other investors.’
In addition to its strong credit backing, the DMO has announced that the dollar-denominated FGN bond will be listed on two prominent Nigerian exchanges: the Nigerian Exchange Limited and FMDQ OTC Securities Exchange Limited.
This dual listing ensures enhanced liquidity and accessibility for investors.Just last week, on August 15, Minister of Finance Wale Edun announced that the highly anticipated bond auction would commence on August 19, setting the stage for investors to participate in this exciting opportunity.
Minister Edun explained that the bond initiative is a dual-purpose strategy, aimed at not only increasing dollar liquidity but also at strategically allocating funds to sectors that will act as catalysts for economic growth and transformation in Nigeria.
Minister Edun further emphasized that the bond initiative would have a stabilizing effect on the foreign exchange rate, helping to reduce volatility and promote a more predictable trading environment.
