The Debt Management Office (DMO) has opened for subscription to two Federal Gover
nment of Nigeria (FGN) savings bonds at 17.41 per cent and 18.41 per cent respectively. The rate is the highest interest on FGN bonds so far.
FGN savings bond is a domestic borrowing instrument of the federal government. So far, the government has raised N4.5 trillion out of its N6 trillion domestic borrowing target in the 2024 budget, the Director General of DMO, Patience Oniha, said at a recent meeting.
The first offer is a two-year savings bond due on June 12, 2026, at 17.4 per cent, while the second is a three-year savings bond due on June 12, 2027, at an interest rate of 18.41 per cent.
The FGN savings bond offer is tailored and targeted at retail investors with guaranteed quarterly interest payment and repayment of the principal at maturity.
In a statement on its X handle, the DMO said the offers opened on June 3, 2024, will close by June 7, 2024.
The DMO said the settlement date is June 12, 2024, while coupon payment dates are made quarterly – September 12, December 12, March 12 and June 12.
“They are offered at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million. Interest is payable quarterly while bullet repayment is made on the maturity date,” it stated.
It said the savings bonds, like all other government securities, are backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria. It added that they also qualify as securities in which trustees can invest under the Trustees Investment Act.
“They qualify as government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for tax exemption and pension funds, amongst other investors,” DMO said.
The agency further said the bonds are listed on the Nigerian Exchange Limited (NGX) and qualify as a liquid asset for liquidity ratio calculation for banks.
The DMO boss said domestic securities remain a major source of federal government spending, saying: “Last year, we raised N7 trillion as new domestic borrowing. It speaks to the size of the domestic market, its resilience and its sophistication, unlike we have in many African markets.”
