In 11 Months, Investors Reap N112bn From Bonds
The Federal Government has paid a total of N112.42bn as interest on fresh bonds issued from July 2018 to May 2019, data obtained from the Debt Management Office has shown.
The interest payments were made between January and November this year.
Bonds are fixed income instruments issued by entities to raise funds and promise to make available regular, fixed income payments to investors.
These income payments are known as coupons and bonds. Bonds such as the Federal Government bonds that pay coupons twice a year are known as semi-annual coupon bonds.
The Federal Government bonds are the most liquid and capitalised bonds on the Nigerian Stock Exchange, which are issued in the primary market through the DMO at its monthly auctions and subsequently listed on the exchange for trading.
These bonds are backed by the full faith and credit of the Federal Government and income earned on FGN bonds is tax-free.
In January, the Federal Government paid N9.11bn as interest on the N66.9bn worth of bonds issued and allotted in the July 2018 bonds.
The N66.9bn consisted of N8.93bn allotted at coupon rate of 12.75 per cent, N11.58bn allotted at 13.53 per cent and N46.39bn allotted at 13.98 per cent.
In February, N5.44bn interest was paid on N39.7bn worth of bonds that were allotted in August 2018 at the same interest rates.
Maintaining same interest rates, the DMO allotted N96.74 worth of bonds in September 2018, of which the Federal Government paid N13.28bn as interest in March this year.
In April, N12.07bn was paid as interest on the N88.08bn bonds allotted in October 2018 at constant interest rates.
Investors, in May, received N722.76m as interest on the N39.52bn investment poured into bonds in November 2018.
A total of N775.59m interest was paid to investors in June for their N5.75bn investment in the FGN bonds offered in December 2018.
In July, investors got N16.19bn as interest on the N116.99bn investment made in FGN bonds offered in January 2019 at the same interest rate with previous ones.
Another N20.71bn interest was paid to investors in August on the N150bn investment made in February this year.
Investors, who subscribed to the March FGN bond auction to the tune of N29.35bn, received N4.03bn as interest in September.
The Federal Government increased interest rates in its April bond auction to 12.75 per cent, 14.55 per cent and 14.80 per cent, paying a total of N14.18bn to investors in October.
Sustaining the interest rates offered in April, the Federal Government in November paid N15.83bn as interest to investors for their N111.76bn investment made in May.