The Federal Government of Nigeria (FGN) has offered for subscription two-year and three-year Savings Bonds for the month of June, creating an additional investment opportunity for low-income earners in the country.
FGN Savings Bond is a fixed-income instrument issued monthly to deepen savings and investment opportunities for the Nigerian populace and diversify funding sources for the government. The bond is also targeted to enhance financial inclusion in the country as income earned from it is exempted from taxes.
The Debt Management Office (DMO), which is offering the debt instruments on behalf of the Federal Government, said the two-year tenor would be offered at 11.418 percent per annum, while the three-year tenor would be offered at 12.418 percent per annum.
The debt office noted that the two-year savings bond would be due on June 19, 2021, while the three-year savings bond would mature on June 19, 2022.
Although the interest rates on the bonds are lower when compared with 11.745 percent and 12.745 percent issued on both tenors in May, they still remain higher than the national inflation rate which rebounded by 11.37 percent in April.
According to the state-owned debt agency, interested investors are expected to bid for the instruments at an auction slated to commence on Monday, June 10 and run through Friday, June 14, with a settlement date of June 19.
In order to participate in the bidding process for the retail savings product, DMO advised investors to contact any of the 129 stock-broking firms appointed as distribution agents by the office.
The bonds are offered at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
The DMO assured that the bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of the country, implying there is no risk of default.
Furthermore, the debt office guaranteed a bullet repayment of the principal on the maturity date with quarterly interest payment dates of September 19, October 19, March 19, and June 19.
In addition, bondholders can use their investment as collaterals to obtain loans, while those who do not wish to hold on to the securities till the maturity date can trade their investment at the secondary market such as the Nigerian Stock Exchange.