FG Plans to Raise N450bn Through Bond Auction in January 2025
The Federal Government is gearing up to raise a whopping N450 billion through its January 2025 bond auction, courtesy of the Debt Management Office (DMO).
This figure surpasses the N360bn offered in January 2024 and the N120bn from December 2024.
The initiative is part of efforts to bridge the fiscal deficit and meet financial obligations while providing investment opportunities for both institutional and individual investors.
The bond auction, scheduled for January 27, 2025, features a combination of reopened and newly issued bonds, designed to appeal to a diverse range of investors.
Settlement for the auction is set for January 29, 2025, ensuring successful bidders promptly gain ownership and begin earning interest.
The offer includes three categories of bonds. The first is a five-year bond with a 19.30 per cent coupon rate, originally issued in April 2029, through which the government aims to raise N100bn.
The second offering is a seven-year bond, first issued in February 2031, carrying an 18.50 per cent coupon rate, with a target of N150bn.
The third is a newly issued ten-year bond, the FGN January 2035 bond, through which the government seeks to raise N200bn.
Together, these bonds form a significant part of the government’s domestic borrowing strategy for the year.
The bonds are available in units of N1,000, with a minimum subscription set at N50,001,000. Investors may increase their subscriptions in increments of N1,000.
They offer semi-annual interest payments, ensuring consistent income for holders, and will be redeemed in full upon maturity, providing a lump-sum repayment.
Tax exemptions under the Company Income Tax Act and the Personal Income Tax Act apply to the bonds, making them particularly attractive to pension funds and other approved investors.
Listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, the bonds are easily accessible and tradable.
Also, financial institutions can use them to meet liquidity ratio requirements, as they are recognised as liquid assets.
The bonds are backed by the full faith and credit of the Federal Government of Nigeria, adding a layer of security for investors.
The government guarantee, charged upon the country’s general assets, further enhances the appeal of these bonds as a low-risk investment option.
Combined with reliable interest payments, they offer a stable and predictable return for investors seeking fixed-income assets.
To participate in the auction, prospective investors must subscribe through authorised Primary Dealer Market Makers such as Access Bank, Zenith Bank, Stanbic IBTC Bank, and United Bank for Africa.
These financial institutions will facilitate the subscription process, guiding interested parties.
This bond issuance is a part of the Federal Government’s strategy to leverage the domestic debt market to address fiscal deficits and fund critical infrastructure projects amidst global economic uncertainties. Economic Confidential previously reported that the government plans to raise up to N1.8tn from the bond market during the first quarter of 2025, as outlined in the newly released FGN Bond Issuance Calendar.
The plan includes a mix of reopened and new bonds across three auctions scheduled for January, February, and March.
