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

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By Dipo Olowookere

The Debt Management Office (DMO) has said it would auction bonds of the Federal Government of Nigeria (FGN) worth N140 billion to investors next week.

The papers, which would be taken to the local bond market precisely on Wednesday, February 19, 2020, would be offered in three different tenors.

According to a circular released by the debt office, N45 billion worth of 5-year bond, N45 billion worth of 10-year bond and N50 billion worth of 30-year bond would be sold to subscribers.

The DMO, in the circular on Tuesday, stated that while the short-dated paper would carry a coupon rate of 12.75 percent, the mid-tenor note will go for 14.55 percent, while the long-term maturity will be at 14.80 percent.

It further stated that the settlement date for the bonds is Friday, February 21, 2020, while the bond sale for the three tenors are re-openings of previously issued notes.

According to the debt office, 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.

The country’s debt management agency said it would welcome subscriptions from investors on the basis of N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

It said interested investors should contact offices of any of Access Bank, First Bank, Standard Chartered Bank Nigeria, Citibank Nigeria, FCMB, UBA, Coronation Merchant Bank, FSDH Merchant Bank, Zenith Bank, Ecobank Nigeria, GTBank FBNQuest Merchant Bank or Stanbic IBTC Bank.

It noted payment of interest on the purchased bonds would be don semi-annually.

FGN Bonds are considered risk-free because they are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

They qualify as securities in which trustees can invest under the Trustee Investment Act. They can used 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.

In addition, all FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks and after sale, they are tradable on the Nigerian  Stock Exchange and FMDQ Securities Exchange, where they would be listed.

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