DMO Opens N1tn FGN Bond Offer for Investors

The Debt Management Office (DMO) has opened a N1 trillion offer of two FGN bonds, giving investors access to long-term government debt.

The offer includes a new N400 billion 10-year FGN bond due in September 2036 and a N600 billion reopening of the 2038 bond, which carries a 15.45 per cent annual coupon.

The DMO said the offer opened on Monday, with settlement scheduled for September 16.

The FGN bonds are priced at N1,000 per unit. Investors must subscribe to at least N50 million, with additional subscriptions in multiples of N1,000.

For the reopened 2038 bond, successful bidders will pay a price based on the yield-to-maturity bid that clears the auction, plus accrued interest.

The DMO said investors will receive interest twice a year, while the government will repay the principal in one payment when each bond matures.

The FGN bond offer comes as investors assess changing returns across Nigeria’s fixed-income market. The 15.45 per cent coupon on the 2038 bond offers a reference point for returns, although the final yield will depend on the auction price.

The N1 trillion size also gives the offer importance in the domestic bond market. Investors must weigh the benefits of securing long-term sovereign debt against possible changes in yields and market prices before maturity.

The DMO said the FGN bonds carry the full faith and credit of the Federal Government. They will also be listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange.

The securities qualify as liquid assets for banks and eligible investments for trustees under the Trustee Investment Act.

Would you consider investing in long-term FGN bonds at current market conditions?