By Dipo Olowookere
The Primary Market Auction (PMA) for the Federal Government of Nigeria (FGN) bonds earlier scheduled by the Debt Management Office (DMO) for Wednesday, July 21, 2021, has been fixed for Monday, July 19, 2021.
Business Post reports that the rescheduling of the exercise was caused by the public holiday declared by the federal government on Tuesday and Wednesday.
The debt office is planning to sell to investors tomorrow the government debt securities worth N150 billion at the primary market.
The DMO is auctioning N50 billion worth of 10-year bond tagged 13.98% FGN FEB 2028, N50 billion worth of 20-year bond tagged 12.40% FGN MAR 2036 and N50 billion worth of 30-year bond tagged 12.98% FGN MAR 2050.
The papers are all re-opening, meaning they have been issued before and when sold tomorrow, they will not be carrying the exact number of years like when they were first auctioned.
At the last exercise held in June 2021, the 10-year note had a maturity of 5 years and 9 months, while the 30-year note was with a tenor of 28 years and 9 months. Last month, the debt office did not sell the 20-year paper but 15-year and it had a maturity of 13 years and 9 months.
How to buy
To subscribe for the bonds, an investor would have to pay N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.
The notes can be purchased from stockbrokers or through the Primary Dealer Market Makers (PDMMs) like Access Bank, First Bank, Standard Chartered Bank Nigeria, Citibank Nigeria, FCMB, UBA. Coronation Merchant Bank, FSDH Merchant Bank, Zenith Bank, Ecobank Nigeria, GTBank Nigeria, FBNQuest Merchant Bank and Stanbic IBTC Bank.
FGN Bonds
FGN Bonds are debt instruments backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.
They qualify as securities in which trustees can invest under the Trustee Investment Act and can qualify as liquid assets for liquidity ratio calculation for banks.
After being sold to investors at the primary market, they are listed on the Nigerian Exchange (NGX) Limited and the FMDQ Securities Exchange to allow for trading at the secondary market.
The papers are tax-free as they qualify as government securities within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for tax exemption for pension funds amongst other investors.
