DMO to Sell N150bn FGN Bonds to Investors August 18

August 13, 2021
N150bn FGN Bonds

By Sodeinde Temidayo David

The Debt Management Office (DMO) has announced that it would auction Federal Government of Nigeria (FGN) bonds worth N150 billion to investors on Wednesday, August 18, 2021.

At the exercise, the debt office will offer the papers for sale at the local debt market in three maturities of 10 years, 20 years and 30 years, which are all re-opening.

In a circular issued to announce the proposed sale, the DMO said prospective investors approach the 13 approved primary dealer market markers (PDMMs) for the purchase of the notes.

These are Access Bank, First Bank of Nigeria, Standard Chartered Bank Nigeria, Citibank Nigeria, FCMB, UBA, Coronation Merchant Bank, FSDH Merchant Bank, Zenith Bank, Ecobank Nigeria, GTBank, FBNQuest Merchant Bank and Stanbic IBTC Bank.

The agency is selling N50 billion worth of each of the tenor (N50 billion worth of the 10-year bond, N50 billion worth of the 20-year bond and N50 billion worth of the 30-year bond).

Also, according to the circular, subscribers would be required to purchase at least 50,000 units of the FGN bonds at N1,000 per unit.

It further said for the interest rate, specifically for the re-openings of previously issued bonds, (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 accrued interest from the main issue date.

It was further noted that the interest would be paid semi-annually to holders of the papers and that the bullet repayment of the notes subscribed by investors would be paid on the maturity date.

This means that those who buy these bonds are paid their interest twice a year and at maturity, they receive their full payment, which is the initial amount invested in the debt securities.

FGN bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

After the exercise, the bonds 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 and qualify as securities in which trustees can invest under the Trustee Investment Act.

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