Aduragbemi Omiyale
By Aduragbemi Omiyale
Those interested in buying the FGN savings bond can now get in touch with their brokerage firms for it, as the Debt Management Office (DMO) has opened the window to investors.
The retail government debt instrument is designed for low-income earners, giving them the opportunity to invest in the fixed-income market and earn something while also supporting the government to raise funds for budget deficits.
The FGN savings bond is tax-free as it 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 others.
It also qualifies as securities in which trustees can invest under the Trustee Investment Act and can be used as a liquid asset for liquidity ratio calculation for banks.
Above all, the debt instrument is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria, meaning that investors are certain to get their funds back at maturity.
In a circular issued by the debt office on Monday, the subscription for the paper commenced yesterday and will end on Friday, May 5, 2023.
The DMO is selling the notes in two tenors of two and three years, with the shorter bond offered at a coupon rate of 10.39 per cent per annum and the longer paper sold at 11.39 per cent per annum.
Interested investors are required to pay at least N5,000 for five units of the FGN savings bonds at N1,000 each and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
After the sale, the bonds would be listed on the floor of the Nigerian Exchange (NGX) Limited to allow for easy exit for investors and easy entry for others who might later be interested.
Subscribers would be paid the interest four times a year on August 10, November 10, February 10, and May 10.
