Nigeria Offers Savings Bond at 10.09%

By Dipo Olowookere

The Nigerian government has announced that it would auction its monthly two-year and three-year savings bonds at 9.09 percent and 10.09 percent respectively at the December exercise.

The bond sale is being conducted by the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria (FGN).

A circular released by the agency on Monday disclosed that investors willing to subscribe to the exercise can begin to do so from December 2, 2019 (yesterday) to 12 noon of Friday, December 6, 2019. They can be bought from any stockbroker appointed by the debt office to sell the instrument.

The DMO said the 2-year FGN Savings Bond due December 11, 2021 would be sold at 9.091 percent per annum, while the 3-year FGN Savings Bond due December 11, 2022 would go for 10.091 percent per annum.

Business Post gathered that the settlement date is December 11, 2019, while the coupon payment dates are March 11, June 11, September 11 and December 11.

During the period of the exercise, the debt office will sell a unit of the paper at N1,000 and would welcome a minimum of 5 units from investors, which is N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.

The FGN Savings Bond is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.

The note (bond) qualifies as securities in which trustees can invest under the Trustee Investment Act and is regarded as government securities under the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds, amongst other investors.

The bond qualifies as a liquid asset for liquidity ratio calculation for banks and after being issued to investors, the bond would be listed on the Nigerian Stock Exchange (NSE).

The FGN Savings Bond was created to allow low-income earners in the country to have investment tools tailored for them. It is also a way of creating an avenue for the class of citizens to contribute to the development of the nation. proceeds from the sales are used to carry out some critical infrastructure in the country, which are beneficial to them.