By Modupe Gbadeyanka
The Debt Management Office (DMO) has opened subscription for the Federal Government of Nigeria (FGN) savings bond for the month of February 2020.
In a circular issued on Monday, the debt office said it would offer the bonds meant for low-income earners in the country in two tenors; two-year and three-year maturities.
According to the notice, the 2-year FGN savings bond due February 12, 2022 would be sold at 5.91 percent, while the 3-year FGN savings bond maturing on February 12, 2023 would be auctioned at 6.91 percent.
Business Post reports that at the January 2020 exercise, the two-year instrument was auctioned at 7.14 percent, while the three-year paper was offered at 8.14 percent.
In the circular, it was stated that subscription for the bonds would begin on Monday, February 3 and close on Friday, February 7, while the settlement date is Wednesday, February 12, 2020, with interest to be paid quarterly on May 12, August 12, November 12 and February 12 until maturity, when the initial invested amount would be repaid by the federal government.
Those interest in buying the papers are required to pay N1,000 per unit subject to a minimum of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million. They are also required to buy from the approved stockbrokers.
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 qualifies as securities in which trustees can invest under the Trustee Investment Act. It also qualifies as government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds, amongst other investors.
In addition, the bond qualifies as a liquid asset for liquidity ratio calculation for banks and after it is issued to subscribers, the bond will be listed on the Nigerian Stock Exchange (NSE).
Adedapo Adesanya