FG Offers Three-year Bond At 2.76% Per Annum
The Federal Government of Nigeria is offering a coupon of 2.759 per cent as annual return to investors for a three-year bond and 1.759 per cent for a two-year bond under government’s monthly savings bond issuance programme.
The coupons showed considerable decline in returns on fixed-income securities as government and corporate takes advantage of liquidity in the system to restructure into low-cost debts.
Application list for the November 2020, 41st tranche of the Federal Government of Nigeria Savings Bond (FGNSB), opened on Monday November 2, 2020 and will close on Friday, November 6, 2020. Settlement date is Wednesday, November 11, 2020.
The Debt Management Office (DMO), which oversees Nigerian sovereign debt issuances, is offering its traditional two-year and three-year bonds. The two-year FGNSB due on November 11, 2022 is offering a coupon of 1.759 per cent per annum, lower than 2.453 per cent per annum of the same bond issued in October 2020.
The three-year FGNSB due November 11, 2023 is offering a coupon of 2.759 per cent, as against 3.453 per cent per annum offered by same bond issued in October 2020.
Minimum subscription to the bonds, offered at N1,000 per unit, was N5,000 or five units and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
The coupon payment dates for the bonds, which pay interest rate quarterly, are February 11, May 11, August 11 and November 11 respectively.
The FGNSB was introduced in 2017 as a mass instrument for nationwide mobilisation of savings and investments. Minimum subscription to the FGNSB is usually N5,000 while the bond pays coupon or interest rate on a quarterly basis.
GTI Securities Limited, one of the authorised distribution agents for the FGNSB, noted that the savings bonds would help to deepen national savings culture while providing opportunity to all Nigerians irrespective of income level to contribute to and benefit from national development.
According to the stockbroking firm, FGNSB enables all Nigerians opportunity to participate in and benefit from the favourable returns available in the capital market.
GTI Securities noted that the savings bonds are acceptable as collateral for loans by banks and can be sold for cash in the secondary market before maturity.
“The bond will be listed on the Nigeria Stock Exchange for trading and provides liquidity for investors who want to exit before maturity,” GTI Securities stated.
It noted that the savings bonds are good for savings towards retirement, marriage, school fees and house projects among other targets while assuring on its safety as the bonds are backed by the full faith and credit of the Federal Government of Nigeria.