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DMO: We’ll auction N150bn FG bonds to investors on Feb 16

The Debt Management Office (DMO) has announced that it will auction N150 billion federal government bonds to investors.

This was announced by the agency via a circular recently published on its website on Wednesday, February 16, 2022.

A bond is a fixed income instrument that represents a loan made by an investor to a borrower — typically corporate or government.

According to the circular, the bond issuance will be in two tranches valued at N75 billion each.

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

It said the bonds sell for N1,000 per unit, subject to a minimum subscription of N50,001,000 and in multiples of N1,000 afterwards.

The DMO stated that the settlement date of the bond issuance is February 18, 2022.

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

It said interest on the bonds would be payable “semi-annually ” while bullet payments would be made on maturity date.

The DMO said the bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

“Qualifies 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 circular reads.

“Listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange. All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks.”

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

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