FG moves to raise N1.2tn through fresh bond offer

The Federal Government has reopened three Federal Government of Nigeria (FGN) bond issues valued at N1.2 trillion for subscription as part of efforts to raise long-term funds from the domestic debt market.

The Debt Management Office (DMO), which announced the offer on Tuesday, said the three reopened bond issues are each valued at N400 billion.

According to the DMO, the first offer is the January 2035 FGN Bond, a 10-year reopening, carrying an interest rate of 22.60 per cent per annum.

The second is the May 2028 FGN Bond, a 15-year reopening, with a coupon rate of 15.45 per cent per annum, while the third is the June 2037 FGN Bond, a 20-year reopening, also valued at N400 billion.

The office said the bond auction is scheduled for July 20, while successful subscriptions will be settled on July 22.

It explained that the bonds are offered at N1,000 per unit, with a minimum subscription of N50 million and additional investments in multiples of N1,000.

For the reopened bonds, the DMO said successful bidders would pay a price based on the yield-to-maturity that clears the auction, in addition to any accrued interest on the instruments.

Interest on the bonds will be paid every six months, while the principal will be repaid in full on the respective maturity dates.

The DMO reaffirmed that FGN bonds are backed by the full faith and credit of the Federal Government and constitute obligations chargeable on the general assets of the federation.

It added that the bonds qualify as trustee investment securities under the Trustee Investment Act and enjoy tax exemptions for eligible investors, including pension funds, under the Company Income Tax Act and Personal Income Tax Act.

The bonds are listed on the Nigerian Exchange (NGX) and FMDQ Securities Exchange and also qualify as liquid assets for banks in computing their liquidity ratios.

FGN bonds are long-term debt instruments through which investors lend money to the Federal Government in exchange for periodic interest payments and repayment of the principal at maturity.