Subscription Opens for FGN Savings Bonds for October

By Modupe Gbadeyanka

Another opportunity has opened for low-income earners in the country to subscribe for the debt securities offered for sale by the Nigerian government.

The debt instrument, called the FGN savings bond, was specifically tailored for low-income earners to encourage them to be part of national development as proceeds from the sale of the papers are channelled towards the execution of critical projects across the country.

At the beginning of every month, the federal government, through the Debt Management Office (DMO), issues the notes and subscribers are expected to buy them within a week.

For the month of October 2020, the subscription has opened. The sale commenced on Monday, October 5 and will run till Friday, October 9.

The savings bond is offered in two maturities; two-year and three-year with an annual coupon (interest) rate of 2.45 per cent and 3.45 per cent respectively.

According to the circular issued by the debt office, payment for the coupon would be made four times every year on January 14, April 14, July 14 and October 14.

To be part of it, intending investor would be expected to buy N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.

On the maturity date, the initial amount paid for the FGN savings bond would be repaid to subscribers by the government. For the 2-year note, the maturity date is October 14, 2022, while the 3-year paper matures on October 14, 2023.

The bonds can be purchased through any of the authorised stockbrokers in the country.

Business Post reports that the debt instrument is backed by the full faith and credit of the Nigerian government and charged upon the general assets of Nigeria.

The FGN savings bond qualifies as securities in which trustees can invest under the Trustee Investment Act. It also qualifies as government securities within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for tax exemption for pension funds, amongst other investors.

After they are issued, the papers are listed on the trading platform of the Nigerian Stock Exchange (NSE) for secondary trading.