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DMO to auction N150bn FGN Bonds next Monday

The Debt Management Office (DMO) has offered for subscription N150billion Federal Government of Nigeria (FGN) bonds which is set for auction next Monday, July 19, 2021.

In a circular, the DMO said the bond auction which would now hold on Monday as against the usual Wednesday is in line with its establishment Act 2003 as well as the local loans (Registered Stock and Securities) Act, CAP, L17, LFN 2004.

The Debt office said it has been authorized to receive applications for three tranches of bond offer, including: N50billion bonds at 13.98 percent for ten-year re-opening due February 2028; N50billion bonds at 12.40 percent for 20-year re-opening due March 2036; and N50billion at 12.98 percent for a 30-year reopening due March 2050.

The settlement date is Friday, July 23, 2021.

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According to the DMO, the bonds will sell for N1, 000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.

“For Re-openings of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument,” the circular stated.

Interest is payable semi-annually while redemption of the bonds purchase is by bullet repayment on the maturity date.

The DMO disclosed that the federal government bonds qualify as securities in which trustees can invest under the Trustee Investment Act; and also as Government securities within the meaning of Company Income Tax Act (“CITA”); and Personal Income Tax Act (“PITA”) for Tax exemption for Pension Funds amongst other investors.

The bonds are listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange. All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.

FGB bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

The DMO stated that it reserves the right to alter the amount allotted in response to market conditions, and urged interested investors to contact the following Primary Dealer Market Makers (PDMM): Access Bank Plc, First Bank of Nigeria Ltd, Standard Chartered Bank Nigeria Ltd, Citibank Nigeria Ltd, First City Monument Bank Plc, United Bank for Africa Plc, Coronation Merchant Bank Ltd, FSDH Merchant Bank Ltd, Zenith Bank Plc, Ecobank Nigeria Ltd, Guaranty Trust Bank Plc, FBNQuest Merchant Bank Ltd and Stanbic IBTC Bank Plc.

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