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FG to raise N150bn from bond market in Sept 2024

The Federal Government, through the Debt Management Office, intends to raise N150 billion from the bond market in September 2024.

This issuance is part of a larger borrowing strategy designed to close the budget deficit.

The auction, scheduled for September 23, 2024, is one of the smallest in 2024, with a 21% decrease from the amount offered in August 2024.

The bond issuance will include the re-opening of previously issued instruments, such as a N70 billion tranche of the 19.30% FGN APR 2029 (5-year bond), a N50 billion tranche of the 18.50% FGN FEB 2031 (7-year bond), and a N30 billion tranche of the 19.89% FGN MAY 2033 (9-year bond).

While the total offering of N150 billion is lower than previous offerings this year, it reflects the government's cautious borrowing strategy in the face of ongoing fiscal concerns.

The bonds will be sold in units of N1,000 each, with a minimum subscription of N50,001,000 and subsequent multiples of N1,000.

This relatively high threshold is intended to attract institutional investors such as pension funds, insurance companies, and other large-scale financial institutions, but high-net-worth individuals are also eligible to participate.

The bonds offer competitive interest rates, with coupon payments of 19.30%, 18.50%, and 19.89% for the 5-year, 7-year, and 9-year bonds, respectively, attracting yield-seeking investors.

The upcoming bonds, with maturities of 5, 7, and 9 years, provide investors with a variety of options for medium- to long-term investments.

The Federal Government of Nigeria's bond auction is scheduled to settle on September 25, 2024.

On this date, successful bidders will pay for their bonds and receive their certificates.

These bonds will pay interest semi-annually, with bullet repayments at maturity, and are fully backed by the credit of the Federal Government of Nigeria. This backing, combined with security on the country's general assets, makes them more appealing to a wide range of investors.

The bonds are listed on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, providing liquidity through secondary market trading.

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