Aduragbemi Omiyale
By Aduragbemi Omiyale
The Federal Government of Nigeria (FGN) savings bond for the month of July 2022 would be sold at a coupon rate between 8.075 per cent and 9.075 per cent.
Subscription for the debt instrument commenced on Monday, July 4 and is expected to close on Friday, July 8, according to a circular issued by the Debt Management Office (DMO) yesterday.
The retail paper, which would be offered in two maturities of 2 years and 3 years, is to sell at 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.
According to the debt office, the 24-month note is to go for 8.075 per cent, while the 36-month instrument is expected to clear at 9.075 per cent. The interests would be paid to investors every quarter, while the initial amount bought would be paid at maturity.
The FGN savings bond can be purchased from accredited sellers, including some stockbrokers and investment firms.
The paper is backed by the full faith and credit of the Nigerian government and is charged upon the general assets of the country, which indicates that the probability of default in payment is very low.
The bond qualifies as securities in which trustees can invest under the Trustee Investment Act and is tax-free based on its exemption in the finance bill 2021.
The FGN savings bond was created by the Nigerian government to make it possible for low-income earners to partake in the development of the nation by lending the government funds to provide some critical infrastructure the government is finding it difficult to get from its normal income streams.
The government approaches the capital market to source funds to finance budget deficits. The FGN savings bond is not the only source the government relies on as it also sells treasury bills, FGN bonds for institutional investors and high net-worth individuals (HNIs), and Eurobond.
