Nigeria to Sell N1.75trn Reopen Bonds to Investors
Nigeria’s Debt Management Office (DMO), on behalf of the Federal Government, is scheduled to offer reopened bonds worth N1.75 trillion for subscription at a primary market auction on Oct. 19.
According to a circular from the DMO, the offer comprises three previously issued local bonds that are being reopened for investor subscription.
The bonds comprise N500 billion of a 10-year bond at an interest rate of 19 per cent per annum, and N800 billion of another 10-year bond at an interest rate of 16.79 per cent per annum.
The third offer is N450 billion of a 15-year bond at 15.45 per cent interest rate per annum. The DMO fixed Oct. 21 for the settlement of successful bids.
It said that the securities qualified as investments for trustees under the Trustee Investment Act and as government securities under the Company Income Tax Act and Personal Income Tax Act, subject to applicable provisions.
The circular said that the bonds were listed on the Nigerian Exchange Ltd. and the FMDQ OTC Securities Exchange.
“All FGN bonds qualify as liquid assets for calculating banks’ liquidity ratios.
“Interest on the bonds will be paid semi-annually, while the principal will be repaid in a lump sum on the respective maturity dates,” it said.
It said that, for reopened bonds whose coupon rates had already been established, successful bidders would pay prices corresponding to the accepted yield-to-maturity bids, together with accrued interest, where applicable.
The circular pegged the unit of sale at N1,000, with a minimum subscription of N50,001,000 and additional subscriptions in multiples of N1,000.
“Interested investors were advised to contact any of the listed Primary Dealer Market Makers (PDMMs), including Access Bank Plc., Citibank Nigeria Ltd., First Bank of Nigeria Ltd., United Bank for Africa Plc., Zenith Bank Plc. and Guaranty Trust Bank Ltd.
Other designated dealers include Stanbic IBTC Bank Ltd., FBNQuest Merchant Bank Ltd., Coronation Merchant Bank Ltd., Ecobank Nigeria Ltd., First City Monument Bank Plc., Standard Chartered Bank Nigeria Ltd., FSDH Merchant Bank Ltd. and Rand Merchant Bank Nigeria Ltd.”
The DMO reserved the right to allot the bonds at its discretion. Federal Government of Nigeria (FGN) Bonds are fixed-income debt securities issued by the DMO on behalf of the Federal Government.
They allow investors to lend money to the government to finance infrastructure, public projects, and national budget deficits.
This is because they are backed by the full faith and credit of the Federal Government; bonds are considered risk-free debt instruments with zero default risk on principal and interest payouts.
