The Federal Government of Nigeria (FGN) has formally issued a $500 million domestic dollar bond, with subscriptions beginning on August 19, 2024. This bond, part of the government’s funding initiatives, has an annual interest rate of 9.75% and will mature in 2029.
The auction for this bond will run until August 30, 2024, providing investors plenty of time to participate. The settlement date, when investors’ purchases are validated and interest starts collecting, is slated for September 6, 2024.
Details of the Bond Offering
This bond sale is a key step forward in Nigeria’s financial strategy, presenting opportunities for investors both domestically and internationally. The bond is structured as a five-year investment with semi-annual coupon payments.
Investors can purchase units for a minimum of $1,000 apiece, with an initial subscription of $10,000 (10 units). Subsequent investments can be made in increments of $1,000. The bond will be redeemed through a bullet repayment at the conclusion of the five-year term, ensuring that investors receive their full principal at maturity.
The bond is available to a diverse group of investors, including Nigerian nationals, persons with funds overseas, Nigerian diaspora members, and qualified institutional investors. The bond qualified as a security under several legal frameworks, including the Trustee Investment Act and the Pension Reform Act, allowing trustees and pension fund administrators to invest in it.
Additionally, it qualifies as a government security under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), offering tax exemption benefits for pension funds. This bond is part of the government’s broader strategy to tap into domestic and diaspora investments, providing a secure and attractive investment vehicle with the backing of the full faith and credit of the Federal Government of Nigeria.
The bond will be listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange Limited, enhancing its liquidity and accessibility for investors.
United Capital Plc is the lead issuing house and coordinator, with Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited also serving as issuing houses.
The bond is further supported by a network of primary dealer market makers and receiving banks, including Access Bank Plc, Citibank Nigeria Ltd., and Guaranty Trust Bank Ltd., among others.
What you should know
- Bizwatch Nigeria earlier reported that the Federal Government of Nigeria planned to issue its dollar-denominated domestic bond on Monday, as it hoped to raise $500 million from local and foreign investors.
- Dr. Gbadebo Adenrele, Managing Director of Investment Banking at United Capital Group, disclosed this during a hybrid roadshow with investors organised by the Debt Management Office (DMO).
- The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, also stated that the $500 million domestic dollar bond will enhance external reserves and help stabilize the foreign exchange situation in the country.
- The Nigerian government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction.
