By Dipo Olowookere
The sale of the Federal Government of Nigeria (FGN) savings bond for the month of June 2022, which started on Monday, June 6 will come to an end on Friday, June 10 (today).
The retail bond offering is being conducted by the Debt Management Office (DMO) on behalf of the Nigerian government, which uses proceeds from the exercise to plug the budget deficit for the year.
When the central government prepares the budget, it makes provision for the borrowing of funds from the capital market due to its inability to generate enough money to spend for the year.
The DMO, as a way to encourage savings among low-income earners and also to give them an opportunity to lend money to the government and still earn something from this, introduced the FGN savings bond.
For this month, the agency is selling the usual two tenors of the debt instrument to subscribers; the 2-year paper maturing on June 15, 2024, at a coupon rate of 8.205 per cent per annum and the 3-year note maturing on June 15, 2025, with a coupon rate of 9.205 per cent per annum.
The bonds are being sold 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.
Interested investors can buy the notes at authorised brokers and they are sure of getting their interest paid by the government every quarter and the bullet repayment on the maturity date.
Investments in the FGN retail bond are tax-free as the asset class qualifies as government securities within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for tax exemption for pension funds, amongst other investors.
The notes are also backed by the full faith and credit of the FGN and charged upon the general assets of Nigeria, indicating that the probability of investors getting their funds trapped is almost impossible.
Adedapo Adesanya