DMO lists N150bn FG bonds for auction

The Debt Management Office (DMO) has listed three federal government bonds of N150 billion at N1,000 per unit for auction.

The agency made the announcement in a circular released on Wednesday.

Bonds are issued by governments and corporates when they want to raise money. The buyer of such bond is giving the issuer a loan — to pay back the face value of the loan on a specific date, and to pay the buyer periodic interest payments along the way.

The new bond auction, valued at N50 billion each, has interest rates of 16.29 per cent; 12.50 per cent and 9.80 per cent, respectively.

The DMO said April 21 has been scheduled for the auction, while settlement will be held on April 23.

“Minimum units for sale are N50,001 thousand and in multiples of N1,000 thereafter,” the circular read.

“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 rate on the instrument.

“It also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds and other investors.

“It is listed on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange.”

The agency explained that interest rates would be paid “semi-annually” with bullet repayment on the maturity date.

It said the bonds qualify as securities in which trustees can invest under the trustee investment act.

The DMO noted that all federal government bonds qualified as liquid assets for the calculation of liquidity ratio for banks.

It urged investors to contact designated banks, adding that the bonds were “backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria”.

This development is coming about a week after DMO announced the offering for subscription of the two and three years federal government savings bond for April 2021.