The Federal Government of Nigeria (FGN) has offered for subscription two Savings Bonds in July, making it the seventh of such offering since the beginning of the year.
FGN Savings Bond is a fixed-income instrument issued monthly to deepen the savings and investment opportunities of the Nigerian populace and diversify funding sources for the government.
The debt instruments comprising a two-year and three-year savings bonds will be offered at interest rates of 11.195 percent and 12.195 percent per annum respectively, according to a notice released by the Debt Management Office (DMO) on Monday.
Compared with other previously issued savings bonds, the interest rates on the two tenors are the lowest so far in 2019, even as headline inflation accelerated the most this year by 11.40 percent in May.
The DMO, which is offering the bonds on behalf of the Federal Government, noted that an auction window for the bond offering would open on Monday, July 1, 2019, and close on Friday, July 5, 2019, while the settlement would be on July 10, 2019.
Interested investors are expected to subscribe for the bonds by sending their applications through any of the 129 stockbroking firms appointed as distribution agents by the debt agency.
The two-year and three-year tenors would have quarterly coupon payment dates of October 10, January 10, April 10 and July 10, while both instruments would mature on July 10, 2021, and 2022, respectively.
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. It also guaranteed a bullet repayment of the principal on the maturity date.
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.
According to the debt office, the bonds would be listed on the Nigerian Stock Exchange (NSE), creating an opportunity for investors to sell their bonds before maturity.
With the FGN Savings Bond, low-income earners can save and earn more interest than regular bank savings. The bond is also aimed at enhancing financial inclusion in the country as income earned from it is exempted from taxes.