DMO to Auction N150bn FGN Bonds October 20

By Sodeinde Temidayo David

The Debt Management Office (DMO), on behalf of the federal government, has announced plans to auction Federal Government of Nigeria (FGN) bonds worth N150 billion on Wednesday, October 20.

According to the circular released by the debt office and as sighted by Business Post, the notes would be offered for sale at the local debt market in three maturities at N50 billion each.

The DMO disclosed in the circular that the papers are in 10 years, 20 years and 30 years, and are all re-opening, with the settlement date fixed for Friday, October 22.

Interested investors are expected to approach any of the 13 approved primary dealer market markers (PDMMs) for the purchase of the notes.

These are Access Bank, First Bank of Nigeria, Standard Chartered Bank Nigeria, Citibank Nigeria, FCMB, UBA, Coronation Merchant Bank, FSDH Merchant Bank, Zenith Bank, Ecobank Nigeria, GTBank, FBNQuest Merchant Bank and Stanbic IBTC Bank.

To buy, intending subscribers are required to pay N1,000 per unit for at least 50,000 units of the FGN bonds.

For the interest rate, specifically for the 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 accrued interest from the main issue date.

According to DMO, interest would be paid semi-annually to holders of the papers and that the bullet repayment of the notes subscribed by investors would be paid on the maturity date.

This means that those who buy these bonds are paid their interest twice a year and at maturity, they receive their full payment, which is the initial amount invested in the debt securities.

After the exercise, the bonds are listed on the Nigerian Exchange (NGX) Limited and the FMDQ Securities Exchange to allow for trading at the secondary market.

The papers are tax-free and qualify as securities in which trustees can invest under the Trustee Investment Act.

FGN Bonds also qualify as liquid assets for liquidity ratio calculation for banks and are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.