DMO, Investors Prepare for N150bn Bond Sale May 19

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By Dipo Olowookere

On Wednesday, May 19, 2021, the Debt Management Office (DMO) will auction bonds worth N150 billion to investors and the participants are gearing up for it.

The Federal Government of Nigeria (FGN) bonds would be sold in three maturities, 10-year, 15-year and 30-year, with N50 billion offered for each.

All the notes are re-openings as they are from the previously issued bonds.

According to the debt office, where the coupon is already set, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.

During the exercise slated for next Wednesday, investors would be required to pay N1,000 per unit for the papers subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

Business Post reports that interested investors can contact offices of any of the approved Primary Dealer Market Makers (PDMMs).

These PDMMs are Access Bank, First Bank of Nigeria, Standard Chartered Bank Nigeria, Citibank Nigeria, First City Monument Bank (FCMB), United Bank for Africa (UBA), Coronation Merchant Bank, FSDH Merchant Bank, Zenith Bank, Ecobank Nigeria, Guaranty Trust Bank (GTBank), FBNQuest Merchant Bank and Stanbic IBTC Bank.

The FGN bonds are backed by the full faith and credit of the Nigerian government and are charged upon the general assets of the country, which prides itself as the largest economy in Africa.

The papers can be used as securities in which trustees can invest under the Trustee Investment Act. They can also be used as government securities within the meaning of the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA) for tax exemption for pension funds amongst other investors.

The notes qualify as liquid assets for liquidity ratio calculation for banks and would be listed on the Nigerian Exchange (NGX) Limited and the FMDQ Securities Exchange after the sale to allow for trading at the secondary market.

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