DMO Cuts Coupon Rates for October FGN Savings Bond

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By Ashemiriogwa Emmanuel

Subscriptions for the Federal Government of Nigeria (FGN) savings bond for October 2021 have commenced and will end on Friday, October 8.

The Debt Management Office (DMO), which sells the debt instrument to investors on behalf of the Nigerian government, commenced subscriptions for this month on Monday, October 4.

The FGN savings bond is targeted at retail investors and it was designed to allow them to have instruments to invest in and earn profit for giving the government avenue to borrow from citizens.

For this month, the debt office is offering the notes in the usual two maturities; 2-year and 3-year with the coupon rates at 6.89 per cent and 7.89 per cent per annum, respectively.

However, the rates the DMO is offering the papers are lower than what was offered at the previous exercise, which was in September. The two-year tenor was sold last month at 7.915 per cent, while the three-year maturity was auctioned at 8.915 per cent per.

In the notice from the agency, the maturity date for the 2-year note is set for October 13, 2023, while that of the 3-year paper will mature on October 13, 2024.

DMO, in the circular, explained that reimbursement of the coupon will be paid on a quarterly basis. This means that payment of interest will be on January 13; April 13; July 13; and October 13, as the settlement date is marked for October 13, 2021.

Investors who want to purchase the bond are required to pay for at least five units at N1,000 each, which is subject to 50,000 units, equating to N50 million, and are expected to approach stockbroking firms appointed as distribution agents by the DMO to buy the notes.

Being tax-free and backed by the full faith and credit of the Nigerian government, the FGN savings bond is a secured investment targeted at low-income earners in the country as it is charged upon the general assets of Nigeria.

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