The Federal Authorities of Nigeria, via its Debt Administration Workplace (DMO), has introduced plans to lift N190 billion from the bond market in August 2024.
Marking its lowest bond provide in 2024, this provide quantity is 37% lower than the N300 billion supplied final month.
The bond provide will likely be performed by public sale on August 19, 2024, that includes three completely different re-openings, every with distinct maturity dates and rates of interest, offering a wide range of choices for potential buyers.
Breakdown of the bond provide
The August 2024 FGN Bond Supply Round outlines that the DMO will likely be reopening three beforehand issued bonds as a part of its technique to lift N190 billion from the bond market.
These bonds, which had been initially issued in earlier years, are being supplied to buyers as soon as once more below engaging phrases designed to make sure robust participation.
- The bonds embody a N70 billion reopening of the 19.30% FGN APR 2029, a 5-year bond that can mature in April 2029.
- Additionally, the DMO is providing one other N70 billion via the 18.50% FGN FEB 2031 bond, which is a 7-year instrument maturing in February 2031.
- The third bond within the providing is the 19.89% FGN MAY 2033, a 9-year bond with a reopening worth of N50 billion, set to mature in Could 2033.
Though previous bond auctions revealed a shift in investor preferences in the direction of higher-yielding and longer-tenor bonds, amidst a backdrop of cautious market sentiment, the federal government supplied a decrease quantity for the longer-tenor bond.
These bonds, identified for his or her aggressive rates of interest, are anticipated to draw vital curiosity from buyers on the lookout for secure, long-term returns within the Nigerian bond market.
These bonds, that are being supplied in models of N1,000, require a minimal subscription of N50,001,000, with increments in multiples of N1,000 thereafter.
What you need to know
The bonds will present semi-annual curiosity funds, with bullet compensation scheduled for the respective maturity dates. They’re totally backed by the total religion and credit score of the Federal Authorities of Nigeria and are secured upon the final property of the nation, reinforcing their enchantment to a variety of buyers.
The public sale, which will likely be performed by the DMO on August 19, 2024, with a settlement date of August 21, 2024, will see the bonds listed on each the Nigerian Alternate Restricted and FMDQ OTC Securities Alternate.
These bonds additionally qualify as securities through which trustees can make investments below the Trustee Funding Act. Furthermore, they’re acknowledged as authorities securities below each the Firm Revenue Tax Act (CITA) and the Private Revenue Tax Act (PITA), making them exempt from sure taxes, which is a pretty function for pension funds and different institutional buyers.
The comparatively decrease provide dimension of N190 billion, in comparison with earlier gives in 2024, displays the federal government’s cautious method within the face of declining demand for the bonds.
The first goal of this bond provide is to lift substantial capital to help the federal government’s fiscal insurance policies and infrastructure improvement.
By issuing these bonds, the FGN goals to draw each native and worldwide buyers, thereby growing the {financial} influx into the nation’s economic system.
These funds are essential for financing key initiatives in sectors equivalent to transportation, healthcare, training, and energy.
Furthermore, the raised capital will assist the federal government meet its budgetary commitments and scale back the reliance on exterior borrowing, which regularly comes with stringent circumstances and better rates of interest.
