Nigeria Offers 30-Year Bond at 14.80%, 5-Year at 12.75%

By Modupe Gbadeyanka

The Debt Management Office (DMO) has announced that it would on Wednesday, November 20, 2019, auction bonds worth N150 billion to investors at the local bond market.

Business Post reports that the bond sale would be conducted by the debt office on behalf of the Federal Government of Nigeria (FGN) through the Dutch auction system.

The notes would be offered in three different maturities; 5-year, 10-year and 30-year tenors. A notice issued by the DMO said N50 billion of the 5-year paper would be sold at 12.75 percent, N50 billion worth of the 10-year bill would be sold at a coupon rate of 14.55 percent and N50 billion worth of the 30-year note at 14.80 percent.

According to the disclosure, the settlement date for the exercise is Friday, November 22, 2019, with each unit of the bonds to be sold at N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter, with the interest payable semi-annually and the bullet repayment done on the maturity date.

The debt office emphasised in the statement that 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.

Interested investors have been advised to contact any of Access Bank Plc, First Bank of Nigeria Ltd, Standard Chartered Bank Nigeria Ltd, Citibank Nigeria Ltd, First City Monument Bank Plc, United Bank for Africa Plc, Coronation Merchant Bank Ltd, FSDH Merchant Bank Ltd, Zenith Bank Plc, Ecobank Nigeria Ltd, Guaranty Trust Bank Plc, FBNQuest Merchant Bank Ltd or Stanbic IBTC Bank Plc.

Business Post reports that FGN bonds qualify as securities in which trustees can invest under the Trustee Investment Act. They also serve as government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds amongst other investors.

After being sold to investors, they would be listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange for trading. In addition, all FGN bonds qualify as liquid assets for liquidity ratio calculation for banks.