FG Commences Savings Bond Auction

The Federal Government has commenced the auction of its savings bond for February this year.

A savings bond is targeted at low-income earners to encourage them to save and earn more income (interest) when compared with their savings account with banks.

Savings bonds are tax-free with competitive fixed interest rates to be paid every quarter, and are tradeable on the Nigerian Stock Exchange. They can be used as collateral for loans.

The FGN Savings Bond auction, according to the Debt Management Office, commenced on February 4 and will close on February 8.

The DMO said the two-year FGN Savings Bond was offered at 12.05 per cent per annum and would be due on February 13, 2021, while the three-year FGN Savings Bond was offered at 13.05 per cent per annum and would be due on February 13, 2022.

It said the bonds were 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 N50m.

The debt office said, “The bond qualifies as securities in which trustees can invest under the Trustee Investment Act. It also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption and pension funds, among other investors.

“Interested investors are advised to contact the stockbroking firms appointed as distribution agents by the DMO.”

Last week, the bonds market reversed its bearish trend following buying interest particularly by investors with lost bids at the bonds auction on Wednesday.

As a result, average yields declined by 23 basis points week-on-week to 14.9 per cent on Friday, crossing the 15 per cent psychological line.

“The short-end of the curve witnessed a rally as more investors positioned in the 22-Mar-19, 12-Apr-19 and 17-May-19 instruments attributable to an anticipated rise in yields ahead of the general elections and handover period,” Analysts at Afrinvest Securities Limited said.