Investors Execute N3.02tn On FGN Bonds In Six Months

FGN Bonds
FGN Bonds Contributed N9.03 trillion to Pension Funds Asset in Q1 - NBS

According to a review of the FGN Bond Auction data accessible on the Debt Management Office’s website, the Federal Government borrowed N3.02tn from bond investors through Federal Government bonds between January and June 2022.

Bond oversubscriptions reached N1.89 trillion during the review period, demonstrating that investors’ interest for FGN bonds is growing. An examination of the breakdown by month revealed that Federal Government bonds worth N150 billion were oversubscribed by N175.24 billion in January.

The total subscription received from investors for the bonds was N325.24bn, comprising N111.19bn for the 12.50 per cent FGN January 2026 bonds and N214.05bn for the 13 per cent FGN January 2042 bonds. The auction result added that out of the 112 and 142 total bids for the tenures, 75 and 85 bids were successful.

The Federal Government bonds for February worth N150bn were also oversubscribed by N407.72bn. The total subscription received from investors for the bonds was N557.72bn, comprising N325.40bn for the 12.50 per cent FGN January 2026 bonds and N232.32bn for the 13 per cent FGN January 2042 bonds. The auction result added that out of the 230 and 151 total bids for the tenures, 46 and 119 bids were successful.

The Federal Government bonds for March worth N150bn were equally oversubscribed by N448.42bn. The total subscription received from investors for the bonds was N598.42bn, comprising N231.02bn for the 12.50 per cent FGN January 2026 bonds and N367.40bn for the 13 per cent FGN January 2042 bonds. The auction result added that out of the 170 and 227 total bids for the tenures, 97 and 141 bids were successful.

By April, the Federal Government seemed to be interested in raising more money from its bonds, as the total value of bonds increased from the regular N150bn to N225bn. Each bond offered was N75bn, with three bonds offered each month.

The Federal Government bonds for April worth N225bn were equally oversubscribed by N184.41bn. The total subscription received from investors for the bonds was N409.41bn, comprising N108.43bn for the 13.53 per cent FGN March 2025 bonds, N78.22bn for the 12.50 per cent FGN April 2032 bonds and N222.76bn for the 13 per cent FGN January 2042 bonds.

The auction result added that out of the 87, 227 and 113 total bids for the tenures, 64, 14 and 95 bids were successful.

The Federal Government bonds for May worth N225bn were equally oversubscribed by N350.63bn. The total subscription received from investors for the bonds was N575.63bn, comprising N125.92bn for the 13.53 per cent FGN March 2025 bonds, N115bn for the 12.50 per cent FGN April 2032 bonds and N334.71bn for the 13 per cent FGN January 2042 bonds. The auction result added that out of the 80, 120 and 135 total bids for the tenures, 45, 87 and 109 bids were successful.

The Federal Government bonds for June worth N225bn were equally oversubscribed by N327.36bn. The total subscription received from investors for the bonds was N552.36bn, comprising N132.6bn for the 13.53 per cent FGN March 2025 bonds, N84.32bn for the 12.50 per cent FGN April 2032 bonds and N335.44bn for the 13 per cent FGN January 2042 bonds. The auction result added that out of the 109, 159 and 13 5total bids for the tenures, 41, 38 and 85 bids were successful.

In addition, bond oversubscriptions hit N1.61tn last year, which is slightly higher than the oversubscription reached in the first three months of 2022. Experts have said that investors will likely go for FGN bonds over other bonds since the bonds qualify for tax exemption.

In December 2011, the Federal Government issued the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011, and the Value Added Tax (Exemption of Proceeds of the Disposal of Government and Corporate Securities) Order, 2011.

The instructions exempted from CIT and VAT the interests and revenues from the sale of short-term FG securities and bonds.
These covered bonds were issued by the federal, state, and local governments, as well as their agencies, as well as corporations and supranational organizations.

The exemptions, according to the gazetted versions of the orders, will be in force for ten years beginning January 2, 2012.

However, bonds issued by the FG will continue to be free from CIT and VAT once the 10-year period expires on January 2, 2022.
The tax breaks make FGN bonds more appealing to investors than other bonds. Investors committed over 100% of what was given last year in the first six months of this year

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