The Federal Government of Nigeria (FGN) is seeking to raise at least $500 million from domestic and foreign investors by issuing its series-1 domestic US dollar-denominated bond.
The bond, which has a five-year maturity and is the first locally issued dollar-denominated asset, will provide investors seeking steady returns with a medium-term investment option. The bond is measured against the yield on the federal government’s Eurobond.
However, given the growing demand for Nigerian instruments, the government anticipates that subscriptions could increase to US$1 billion under this first series. The total amount of the domestic dollar bond program is $2 billion, although the federal government may decide to expand it if needed.
The bond is open to Nigerians and non-Nigerians resident in the country; Nigerians in Diaspora; as well as qualified institutional investors. Pension funds are also eligible to invest in the instrument.
The document confirmed that the bond offer, closing and settlement will all happen this August as planned, though no specific days were given just yet.
As stated earlier in a Presidential Executive Order, the net proceeds and its accretion will be ring-fenced and then invested in critical sectors to be approved by the President- though on the recommendation of the finance minister and subject to appropriation by the National Assembly.
Also, bondholders are exempted from income tax on accumulated interests. They will also enjoy some other exemptions as stated in a notice issued by the Federal Inland Revenue Service (FIRS).
The bond will be listed and admitted for trading on the Nigeria Stock Exchange as well as the Financial Markets Dealers Quotation (FMDQ).
