DMO Offers N1.1tn FGN Bonds For Subscription

The Debt Management Office (DMO) has offered three FGN bonds worth N1.1 trillion for subscription at N1,000 per unit.

The FGN bonds include a January 2035 issue worth N250 billion, with a 10-year reopening and an interest rate of 22.60 per cent annually. The second is an April 2037 bond valued at N100 billion, representing a 20-year reopening, with an interest rate of 16.2499 per cent.

The Federal Government has also reopened a June 2038 FGN bond valued at N750 billion, with a 15-year reopening and an interest rate of 15.45 per cent.

The FGN bonds will have their auction on August 17, while settlement is scheduled for August 19. Each bond is offered at N1,000 per unit, with a minimum subscription of N50 million and additional subscriptions in multiples of N1,000.

The DMO explained that successful bidders for reopened bonds will pay a price based on the yield-to-maturity bid that clears the auction volume, together with any accrued interest. Interest will be paid twice a year, while investors will receive the principal at maturity.

The FGN bonds are debt instruments issued by the DMO on behalf of the Federal Government and are backed by its full faith and credit. They mainly target institutional investors and high-net-worth individuals, including pension funds, banks, insurers, asset managers and corporate treasury desks.

The securities also qualify as government investments under relevant laws and are listed on the Nigerian Exchange and FMDQ OTC Securities Exchange. They can also count as liquid assets when banks calculate their liquidity ratios.

“Auction date is Aug. 17, and the settlement date is Aug. 19.

Could the new FGN bonds attract stronger investor demand?