Dipo Olowookere
By Dipo Olowookere
The Debt Management Office (DMO) on Monday commenced the sale of the FGN Savings Bond subscription for the month of February for two-year and three-year to investors at 10.277 percent and 11.277 percent per annum respectively.
The DMO is conducting the auctioning on behalf of the Federal Government of Nigeria.
The savings bond gives Nigerians the opportunity to invest in the bond market for as low as N5000.
Business Post reports that subscription for the bonds opens Monday, February 05, 2018 and ends on Friday, February 9, 2018.
However, the coupon rates for the two papers are below what were offered in the previous exercise held last month.
At the January 2018 exercise, the 2-year paper was offered at 11.098 percent, while the 3-year note was sold at 12.098 percent.
Some of the benefits of investing in the savings bond include enjoying tax free on interest income, returns are competitive and guaranteed investors will enjoy interest payments on a quarterly basis while principal will be repaid on maturity.
Also, the savings bond provides liquidity as it will be tradable on the Nigerian Stock Exchange, while the bond can be used as collateral for loan.
Also, investing in the bond serves as savings towards retirement, marriage, school fees, house projects, etc.
To subscribe, investors have to have a minimum of N5,000 with additions in multiples of N1,000. Fixed interest rate to be paid on a quarterly basis while principal will be repaid on maturity.
In addition, the rate will be announced on monthly basis before the commencement of the offer and the bond is backed by the full faith and credit of the Federal Government of Nigeria.
The purpose of the savings bond is to deepen the national savings culture, provide opportunity to all citizens irrespective of income level to contribute to national development, enable all citizens participate in and benefit from the favourable returns available in the capital market, and also help to diversify funding sources for the government.
Investors can subscribe through stockbroking firms trading on the floor of the NSE and accredited by the DMO to act as Distribution Agents.
