Aduragbemi Omiyale
By Aduragbemi Omiyale
Subscription for the February FGN savings bond, which started on Monday, February 7, 2022, will end on Friday, February 11, 2022.
The monthly sale of the papers gives investors, especially the low-income earners, the opportunity to partake in the capital market and also contribute to nation-building.
This is because they provide the government with the funds needed to finance some projects and help with the capital needed to fund the budget deficit.
As it is in the previous exercises, the Debt Management Office (DMO) is offering the notes in two-year and three-year maturities.
According to the circular issued by the debt office, the 2-year FGN savings bond due February 16, 2024, is going for 7.220 per cent per annum, while the 3-year FGN savings bond due February 16, 2025, is going for 8.220 per cent per annum.
Interested investors have been buying the bonds through their stockbrokers at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
They will receive the coupon every May 16, August 16, November 16, February 16 till the tenor of the bonds and the initial investment at maturity.
The savings bond is backed by the full faith and credit of the Federal Government of Nigeria (FGN) and charged upon the general assets of the country.
The paper qualifies as securities in which trustees can invest under the Trustee Investment Act and as government securities within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), it is tax-free.
The note can be used as a liquid asset for liquidity ratio calculation for banks and after the issuance, it would be listed on the Nigerian Exchange (NGX) Limited to allow it to be traded via the secondary market, providing an exit route for investors who intend to selloff before maturity.
