FG Pays N609bn Interest to T-Bills, Bond Investors

July 4, 2020
Bond market

By Dipo Olowookere

At least, the sum of N609 billion was paid to those who bought treasury bills, savings bonds, FGN bonds and other federal government debt securities in the first three months of 2020.

This information was revealed by the Debt Management Office (DMO), the agency saddled with the responsibility of overseeing the nation’s borrowings.

In a circular released this week, the DMO said the federal government paid the sum to subscribers of the debt instruments as interest from January to March 2020.

An analysis of the debt servicing by the government by Business Post showed that the FBN Bonds gulped the highest amount paid as interest on the domestic debt in the period under consideration.

According to the DMO, FGN bond investors were paid N488.9 billion, followed by T-bills investors, who got N111.6 billion, FGN Sukuk Bonds investors, who got N8.2 billion as rentals, and FGN Savings Bond investors, who were paid N392.8 million as interest in Q1 2020.

A month-by-month breakdown of the payments showed that in January, treasury bills investors got N65.8 billion as interest, FGN bonds subscribers were paid n185.5 billion, while FGN Savings bonds investors got N140.3 million.

In February, while T-bills subscribers received N31.0 billion as interest, FGN bond investors got N127.0 billion, with FGN Savings bond investors got N124.6 million.

The next month, the Nigerian authorities paid N14.8 billion as interest to those who bought treasury bills, paid N176.5 billion to FGN Bonds investors, paid N127.9 million FGN Savings bond subscribers and paid N8.2 million to those subscribed to the FGN Sukuk bond investors.

As at the close of business of March 31, 2020, Nigeria has borrowed the sum of N28.6 trillion from the local debt market, a 4.4 percent quarter-on-quarter increase from the N27.4 trillion as at December 31, 2019.

The federal government issues these debt securities to investors to raise funds to finance some projects in its budgets. Lately, borrowing locally has been cheaper because of the single-digit interest unlike a few years ago when T-bills were at over 18 percent. As at the last exercise, the one-year bill was issued at 3.39 percent per annum.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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