The Debt Management Office (DMO) has announced the issuance of bonds worth N450 billion in its upcoming auction scheduled for May 13, 2024.
The offering forms part of the government’s monthly bond auction, aimed at supporting national financial requirements while providing attractive investment opportunities for institutional and retail investors.
Breakdown of bond series and details
- The May 2024 auction will feature three distinct bond series, each providing investors with various maturity options and competitive yields. The first bond series is a five-year reopening of the 19.30% FGN APR 2029 bond. Initially issued in April 2024, this bond will be reopened to raise N150 billion. Investors will benefit from a fixed coupon rate of 19.30%, ensuring stable returns throughout the maturity period.
- The second bond series is a seven-year reopening of the 18.50% FGN FEB 2031 bond. This bond was originally issued in February 2024 and is also set to raise N150 billion. With a coupon rate of 18.50%, it offers investors an opportunity to earn steady interest income over the long term while contributing to national development.
- The final bond in this auction is a newly introduced nine-year bond, FGN MAY 2033, aiming to raise N150 billion. As a new issuance, the coupon rate will be determined based on the yield achieved at auction. Investors seeking longer-term investment opportunities will find this bond attractive due to its extended maturity and potential for significant yield.
The auction will take place on May 13, 2024, with a settlement date of May 15, 2024. Each unit will be available at N1,000, with a minimum subscription requirement of N50,001,000 and subsequent multiples of N1,000. Interest payments for all three bonds will be made semi-annually, providing investors with regular income throughout the investment period.
Investment benefits and security
All bonds will mature with a bullet repayment on their respective dates, ensuring full principal repayment. Furthermore, these bonds are backed by the full faith and credit of the Federal Government of Nigeria, which guarantees their security and charges them against Nigeria’s general assets.
In addition to being attractive investment opportunities, these bonds offer several benefits to investors. They qualify as securities under the Trustee Investment Act and are recognized as government securities under both the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), making them eligible for tax exemptions for pension funds and other qualified investors. Moreover, all FGN bonds are classified as liquid assets for bank liquidity ratio calculations and are listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange.
What You Should Know
- The DMO disclosed that Federal Government of Nigeria raised N626.813 billion in its April 2024 FGN bond auction.
- This amount was about 32% higher than the N475.67 billion raised in the previous month’s auction. The significant capital inflow was garnered through the sale of long-term securities, divided across three distinct bond series with varying maturities.
- The auction, which took place on April 15, 2024, showcased robust investor interest, particularly for the 10-year bond. This instrument alone attracted a substantial total subscription of N550.828 billion, indicating high market confidence in the government’s credit.