Nigeria to Auction N90 Billion bonds
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The Nigerian Government has offered for
subscription by auction N90 billion worth of bonds in its April 25 auction, the Debt Management Office (DMO) said.
The offer circular obtained from its website by Economic Confidential on Wednesday in Abuja, stated that it would sell N30 billion of a five-year new issue maturing in April 2023 at an undisclosed rate.
It would also sell N30 billion seven-year re-opening bond to mature in March 2025 at 13.53 per cent and another N30 billion 10-year re-opening bond at 13.98 per cent to mature in Feb. 2028.
Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN) issued by the Debt Management Office (DMO) for and on behalf of the Federal Government. The FGN has an obligation to pay the bondholder the principal and agreed interest as and when due. When you buy FGN Bonds, you are lending to the FGN for a specified period of time. The FGN Bonds are considered as the safest of all investments in domestic debt market because it is backed by the ‘full faith and credit’ of the Federal Government, and as such it is classified as a risk free debt instrument. They have no default risk, meaning that it is absolutely certain your interest and principal will be paid as and when due. The interest income earned from the securities are tax exempt. The Federal Government of Nigeria (FGN) issues Bonds for the following reasons:To finance government fiscal deficits in a non-inflationary and sustainable manner. To enhance fiscal discipline of the Government.•To refinance maturing debt obligations of the Federal Government.• To establish benchmark yield curve, this serves as reference for pricing bonds issued by other bodies, especially the private sector issuers.• To develop and ensure liquidity in the domestic bond market on a sustainable basis.• To enhance and deepen the savings and investment opportunities of the populace.• To sustain the development of other segments of the Bond market.• To diversify government financing sources
