FG Launches N300 Billion Bond Re-issue for March 2025 Auction

Nigeria’s Debt Management Office to Offer N300 Billion in Re-Opened Federal Government Bonds

The Debt Management Office (DMO) of Nigeria has announced an upcoming auction for two re-opened Federal Government of Nigeria (FGN) bonds, totaling N300 billion. This initiative is part of a larger domestic borrowing strategy by the Federal Government aimed at addressing budget deficits and enhancing infrastructure development across the country.

The auction is scheduled to take place on March 24, 2025, with settlements set for March 26, 2025. The DMO will make available two specific bonds for subscription:

1. N200 billion of 19.30% FGN APR 2029 (5-Year Re-opening)
2. N100 billion of 19.89% FGN MAY 2033 (9-Year Re-opening)

Both offerings are re-openings of previously issued bonds, meaning their coupon rates have been established beforehand. Investors will bid based on the yield-to-maturity that would clear the auction volume, and they will additionally cover accrued interest on the bonds.

Key Features of the Bonds

• Units of Sale: Each bond unit is priced at N1,000, with a minimum subscription threshold set at N50,001,000, and further increments allowed in multiples of N1,000.
• Interest Payments: Investors will receive interest payments semi-annually, ensuring a consistent income stream.
• Redemption Terms: The bonds are structured for full repayment (bullet repayment) at their respective maturity dates.
• Investment Status: The bonds are recognized as securities permissible for trustee investments under the Trustee Investment Act, and also as government securities under both the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), granting tax exemption particularly for pension funds and other investors. Furthermore, they are listed on the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, which enhances their liquidity and transparency.

Investor Benefits

1. Attractive Yields: Offering yields of 19.30% for the 5-year bond and 19.89% for the 9-year bond, these securities present competitive returns when compared to other fixed-income investments in the market.
2. Tax Advantages: The tax-exempt status of these bonds makes them particularly appealing to institutional investors, such as pension funds, who are seeking efficient investment avenues.
3. Liquidity: Being listed securities, the bonds can be easily traded on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, granting investors flexibility and liquidity.
4. Security Assurance: Backed by the Federal Government of Nigeria’s full commitment, these bonds are classified as low-risk investments with additional security derived from being charged against the general assets of Nigeria.

Upcoming Auction Process

The auction is set for March 24, 2025, with successful bidders required to finalize their payments by March 26, 2025. Investors interested in participating in the auction are encouraged to place their bids through approved primary dealers, who serve as intermediaries between the DMO and potential investors.

This bond issuance is part of the Federal Government’s overarching strategy to effectively manage national debt while simultaneously providing appealing investment opportunities to domestic investors.