DMO Begins Sale of FGN Retail Bonds for April 2022
By Dipo Olowookere
The Debt Management Office (DMO) has announced the commencement of the sale of the FGN savings bond for April 2022.
The retail debt instrument is issued to low-income earners and other investors by the debt office on behalf of the Nigerian government on a monthly basis. It is issued in two different tenors of 2 years and 3 years.
According to a circular issued by the DMO for this month’s exercise, the 2-year saving bond due on April 13, 2024, will be sold at a coupon rate of 7.338 per cent, while the 3-year saving bond maturing on April 13, 2025, will go for 8.338 per cent.
Interested investors can purchase the FGN retail bonds till Friday, April 8 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. They can be bought at stockbroking firms appointed as distribution agents by the debt office.
The federal government pays the bondholders interest on the securities on a quarterly basis, while the initial funds for the investment are paid at maturity. This means anyone who buys the N5,000 worth of the 2-year note will be paid N5,000 on April 13, 2024, after receiving N91.73 each quarter for two years.
FNG saving bond is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.
It qualifies as securities in which trustees can invest under the Trustee Investment Act and within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), it qualified as government securities for tax exemption for pension funds, among others.
It also qualifies as a liquid asset for liquidity ratio calculation for banks and after the sale, the notes would be listed on the Nigerian Exchange (NGX) Limited to provide an exit route for those who intend to sell before maturity.