DMO to Sell N150bn FGN Bonds Wednesday

By Modupe Gbadeyanka

On Wednesday, January 20, 2021, the Debt Management Office (DMO) will auction FGN bonds to investors at the local debt market.

A circular issued by the agency said the notes are from the previously issued debt securities and they are the 10-year, 15-year and 25-year papers.

In the circular obtained by Business Post, the DMO said the settlement date for the exercise is Friday, January 22, 2021.

The agency would be offering for sale N50 billion of the 10-year (16.29 per cent FGN MAR 2027) bond, N50 billion of the 15-year (12.50 per cent FGN MAR 2035) bond and N50 billion of the 25-year (9.80 per cent FGN JUL 2045) bond.

According to the debt office, for 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 any accrued interest on the instrument.

It noted that subscribers would be expected to pay N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

Interested investors can purchase the bonds from any of the 13 primary dealer market markers; 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 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. The interests are paid two times each year and are tax-free because they 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.

The notes qualify as securities in which trustees can invest under the Trustee Investment Act and after issuance, they are listed on the Nigerian Stock Exchange (NSE) and FMDQ Securities Exchange and the FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.