DMO to auction N1.2trn bonds at N1,000 per unit

The Debt Management Office (DMO), on behalf of the Federal Government, has re-opened three bonds valued at N1.2 trillion for subscription.

The DMO said the first offer is a January 2035 FGN bond (10-year re-opening), valued at N400 billion, and at interest rate of 22.60 per cent per annum.

The second offer is a 2028 FGN bond (15- year re-opening), valued at N400 billion at 15.45 per cent per annum.

The third offer is a 2037 FGN bond (20-year re-opening), also valued at N400 billion.

According to the DMO, the auction date is July 20, while the settlement date is July 22.

The DMO noted that the bonds were offered at N1,000 per unit, subject to a minimum standards subscription of N50 million and in multiples of N1, 000 thereafter.

It stated: “For re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest in the instrument.

“Interest is payable semi-annually, and bullet repayment is on the maturity date.”

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The DMO said FGN bonds, like other federal government securities, are backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria.

The office added: “They qualify as securities in which trustees can invest under the Trustee Investment Act.

“They qualify as government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for exemption for pension funds, amongst other investors.

“They are listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange Limited, and they qualify as liquid assets for liquidity ratio calculation for banks.”

FGN bonds are long-term debt securities issued by the Nigerian government through the DMO.

Subscription to FGN bonds means one is lending money to the federal government, which agrees to pay interest (coupon) at regular intervals and to repay the principal when the bond matures.