By Modupe Gbadeyanka
Last week, the Debt Management Office (DMO) announced the resumption of the sales of FGN savings bond.
Earlier in the year, the DMO suspended the sale of the papers to investors, citing the lockdown in Lagos, Abuja and Ogun State by the federal government for reason of its action.
“The DMO was constrained to suspend the monthly offers of the FGN Savings Bond in April 2020 due to the restrictions on activities and movement as part of measures adopted by the government to curtail the spread of COVID-19,” a notice from the agency had said.
The FGN savings bond was created for retail investors and low-income earners in the country to enable them to contribute to the development of the nation by borrowing government money to carry out critical infrastructure across the country.
With the lifting of the suspension in the sale of the notes, investors can begin to subscribe for the bonds from today till Friday.
According to a circular, the debt office will auction the papers in the usual two maturities; 2-year and 3-year.
The notes are issued monthly and for August 2020, intending subscribers would be required to pay N1,000 per unit subject to a minimum of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
They will be required to buy the notes from the approved stockbrokers, most of who are the normal brokerage companies for stock trading in the country.
The FGN savings bond is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.
The note qualifies as securities in which trustees can invest under the Trustee Investment Act. It also qualifies 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, the bond qualifies as a liquid asset for liquidity ratio calculation for banks and after it is issued to subscribers, the bond will be listed on the Nigerian Stock Exchange (NSE).
