By Seun Ibiyemi
The Debt Management Office (DMO) has announced plans to reopen two Federal Government bonds worth a combined ¦ 350 billion for public subscription, priced at ¦ 1,000 per unit.
In a statement released yesterday, the DMO confirmed that the auction is scheduled for 28 April, with a settlement date set for 30 April.
According to the DMO, the bond issuance will be split into two tranches. The first, valued at ¦ 200 billion, is a five-year savings bond set to mature in April 2029. It will offer an interest rate of 19.30 percent per annum.
The second tranche amounts to ¦ 150 billion and will mature in May 2033. This nine-year bond carries a slightly higher annual interest rate of 19.89 percent.
Each bond unit is priced at ¦ 1,000, with a minimum subscription threshold of ¦ 50,001,000. Subsequent investments must be made in multiples of ¦ 1,000.
For these reopened bonds, which have fixed coupon rates, successful bidders will be required to pay a price reflecting the yield-to-maturity bid that clears the auction volume. This payment will also include any accrued interest on the instruments, the DMO clarified.
Interest on both bonds will be disbursed semi-annually, while the principal will be repaid in full at maturity. The DMO further noted that these savings bonds qualify as approved investments for trustees under the Trustee Investment Act.
Additionally, the bonds meet the definition of government securities under both the Company Income Tax Act (CITA) and the Personal Income Tax Act (PIA), rendering them eligible for tax exemptions, including for pension funds and other institutional investors.
The instruments will be listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, providing secondary market liquidity.
The DMO reaffirmed that all Federal Government of Nigeria (FGN) bonds qualify as liquid assets for the purpose of banks’ liquidity ratio calculations. It also stressed that these bonds are fully backed by the faith and credit of the federal government and are secured by Nigeria’s general assets.