Business Post Contributor
By Ashemiriogwa Emmanuel
A total of 372 retail investors successfully purchased the Federal Government of Nigeria (FGN) savings bonds for August 2021, Business Post reports.
According to details of the exercise released by the Debt Management Office (DMO) on Wednesday, 99 investors were allotted the 2-year debt instrument, while 228 investors bought the 3-year paper.
The DMO sells the FGN savings bonds to low-income earners in the first week of every month as part of efforts to offer them the opportunity to invest in the fixed income market.
The investment tool was created after the Central Bank of Nigeria (CBN) increased the minimum amount of subscription for treasury bills to N50 million from N10,000 a few years ago.
The T-bills market was before then the usual destination for low-income earners but after the apex bank pushed them out, the FGN savings bonds were introduced to keep them in the market.
Since the introduction, retail investors have had good options at the fixed income market and the August 2021 exercise has shown that the instrument still remains attractive to the target audience.
Results of the allotment indicated that a total of N205.0 million of the 2-year bond was sold during the exercise, while N683.3 million was allotted for the 3-year maturity, totalling N888.3 million.
While the 2-year note cleared at 8.86 per cent at the exercise, the 3-year paper was sold to investors at 9.86 per cent, according to the debt office.
Subscribers are expected to receive interest for the bonds four times a year till maturity. This means their bank accounts would be credited by the government every August 11, November 11, February 11 and May 11.
The maturity for the 2-year paper is August 11, 2023, while the 3-year paper will be due on August 11, 2024.
The DMO sold the papers from Monday, August 2 till Friday, August 6.
The FGN savings bonds are targeted at retail investors and lower-income earners to encourage savings and earn more income compared to their traditional savings accounts.
The minimum amount of subscription is N5,000 while the maximum is N50 million. The next exercise is due for the first week of September.
