Modupe Gbadeyanka
By Modupe Gbadeyanka
The Debt Management Office (DMO) has introduced a 15-year bond, which it intends to sell to investors on Wednesday, March 25, 2020.
On Tuesday, the agency saddled with the responsibility of managing Nigeria’s debt released a revised calendar for bond issuance for the first quarter of this year.
In the circular obtained by Business Post, the DMO said it would auction from N10 to N20 billion worth of the new bond maturity in two weeks’ time but did not disclose the interest rate. This would be unveiled before the exercise takes place.
In the calendar, the debt office said the debt instrument maturing in March 2035 would be sold to market participants alongside two other tenors; 5-year and 30-year.
The disclosure said about N10 billion to N20 billion worth of the 5-year instrument, which is reopening at 3-year, would be auctioned during the exercise at 12.75 percent. This bond is expected to expire in April 2023.
For the third tenor, 30-year, the DMO would be issuing new ones to investors and are expected to mature in March 2050. The issuing rate was not disclosed in the circular.
Business Post recalls that in April 2019, the debt office introduced the 30-year FGN bond and was oversubscribed by 400 percent.
The agency had issued N20 billion worth of the debt instrument in April 24, 2019 at a coupon rate of 14.80 percent.
FGN bonds qualify as securities in which trustees can invest under the Trustee Investment Act. They also qualify as government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds amongst other investors.
They are liquid assets for liquidity ratio calculation for banks and are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.
