FG Targets N1trn as DMO Opens New Bond Subscription

The Debt Management Office (DMO), on behalf of the Federal Government, has announced the offer of two FGN bonds valued at a combined N1 trillion, available for subscription at N1,000 per unit.

According to a statement issued by the DMO on Monday in Abuja, the first offer is a new 10-year FGN bond, maturing in September 2036, valued at N400 billion. The second is a 2038 FGN bond valued at N600 billion, carrying an interest rate of 15.45 per cent per annum as a 15-year re-opening.

The DMO said the offer opens on September 14, with a settlement date of September 16.

"The FGN bonds are offered at N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter. For re-openings of previously issued bonds, where the coupon is already set, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest. Interest is payable semi-annually, while bullet repayment is on the maturity date," the DMO stated.

It further explained that FGN bonds, like all other Federal Government securities, are backed by the full faith and credit of the Federal Government and are charged upon the general assets of Nigeria. "They qualify as securities in which trustees can invest under the Trustee Investment Act. They qualify as government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for exemption for pension funds, amongst other investors. They are listed on the Nigerian Exchange Ltd. and FMDQ OTC Securities Exchange, and they qualify as liquid assets for liquidity ratio calculation for banks," the DMO said.

The Federal Government of Nigeria (FGN) Bonds are fixed-income debt securities issued by the DMO on behalf of the Federal Government, allowing investors to lend money to the government to finance infrastructure, public projects, and national budget deficits. Because they are backed by the full faith and credit of the Federal Government, FGN bonds are widely regarded as risk-free debt instruments, carrying zero default risk on both principal and interest payouts.