Debt Management Office Set To Auction ₦150 Billion FG Bonds

The Debt Management Office (DMO) has announced that on Wednesday, February 16, 2022, it will auction N150 billion in federal government bonds to investors.
This was announced in a circular that was recently published on the agency’s website.

A bond is a fixed-income investment instrument that represents a loan made by an investor to a borrower, typically a corporation or the government.

The bond will be issued in two tranches of N75 billion each, according to the circular.

The first tranche is a 10-year, 12.5 percent FGN Jan 2026 re-opening bond, and the second is a 20-year, 13% FGN 2042 re-opening bond.

It stated that the bonds are sold for N1,000 per unit, with a minimum subscription of N50,001,000 and subsequent multiples of N1,000.

The DMO stated that the bond issuance will be settled on February 18, 2022.

The agency specified that successful bidders must pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument, for re-openings of previously issued bonds (where the coupon is already set).

It stated that interest on the bonds would be paid “semi-annually,” with bullet payments made on the maturity date.

According to the DMO, the bonds are securities in which trustees can invest under the Trustee Investment Act.

“Qualifies as Government securities under the Company Income Tax Act (“CITA”) and the Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds and other investors,” according to the circular.

“Listed on the Nigerian Exchange Limited as well as the FMDQ OTC Securities Exchange.” All FGN Bonds are considered liquid assets for the purposes of calculating banks’ liquidity ratios.”

The debt management agency assured investors that all bonds are backed by the federal government of Nigeria’s full faith and credit and are charged against Nigeria’s general assets.