DMO offers two- and three-year securities to investors, with quarterly interest payments and a N5,000 minimum subscription….
The Federal Government has opened a fresh opportunity for retail investors to earn fixed returns, with the Debt Management Office (DMO) offering two Federal Government of Nigeria savings bonds for subscription.
The bonds are being offered at N1,000 per unit, with annual interest rates of 13.071 percent and 14.071 percent for the two-year and three-year instruments respectively.
In a statement issued in Abuja on Tuesday, the DMO said the first offer is a two-year FGN savings bond maturing on October 14, 2028, while the second is a three-year bond due on October 14, 2029.
The subscription opened on October 5 and will close on October 9, with settlement scheduled for October 14.
Under the offer, investors in the two-year bond will receive an annual interest rate of 13.071 percent, while those subscribing to the three-year instrument will earn 14.071 percent per annum.
How much can investors subscribe?
The DMO said investors can enter the offer with as little as N5,000, with additional subscriptions allowed in multiples of N1,000.
The maximum amount an individual investor can subscribe to is N50 million.
Interest on the bonds will be paid quarterly, with coupon payments scheduled for January 14, April 14, July 14 and October 14 each year.
The principal will be repaid in full when the bonds reach maturity.
This means investors who hold the securities until maturity will receive their regular quarterly interest payments throughout the investment period, followed by repayment of the principal at the end of the applicable tenor.
Government backs bonds with full faith and credit
The DMO said the savings bonds carry the backing of the Federal Government, describing them as securities supported by the full faith and credit of the government and charged upon the general assets of Nigeria.
The securities also qualify as investments for trustees under the Trustee Investment Act.
The DMO further stated that the bonds qualify as government securities under the Company Income Tax Act and Personal Income Tax Act, providing tax exemptions applicable to certain investors, including pension funds.
The bonds are also listed on the Nigerian Exchange Limited, while banks can recognise them as liquid assets when calculating their liquidity ratios.
What are FGN savings bonds?
FGN savings bonds are debt securities issued by the DMO on behalf of the Federal Government and are targeted primarily at individual and retail investors.
Rather than requiring investors to commit large amounts of capital, the instrument allows individuals to lend money to the government while earning a predetermined return over the life of the bond.
With the latest offer, investors can choose between a shorter two-year maturity at 13.071 percent or a three-year maturity offering the higher annual return of 14.071 percent.
The offer provides retail investors with another avenue for investing in government-backed securities while earning interest at predetermined intervals.
