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FEDERAL GOVERNMENT OF NIGERIA (FGN) SAVINGS BONDS

FEDERAL GOVERNMENT OF NIGERIA (FGN) SAVINGS BONDS

INTRODUCTION

  • In March 2017, the Debt Management Office(DMO) on behalf of the Federal Government of Nigeria (FGN) has introduced a retail savings product - the FGN Savings Bonds, targeted at all income groups.
  • Savings Bonds are debt instruments usually offered by sovereigns with the aim of raising funds from the public, predominantly individuals and small savers - and offers fixed rate of interest over a fixed period of time.
  • The FGN Savings Bonds are debt securities of the FGN backed by the ‘full faith and credit’ of the Federal Government and have low default risk(it is a safe investment where interests will be paid at regular period and principal repaid at maturity).

 

FEATURES OF FGN SAVINGS BONDS

  • Tenor: The product will be issued in tenors of 2 and 3 years,
  • Interest Payment: Fixed quarterly coupon/interest payment.
  • Denomination: Minimum subscription of N5, 000.00 (with additional investments in multiples of N1,000.00) and a maximum investment lot of N50, 000,000.00 (Fifty Million Naira Only).
  • Frequency of Issue: To be issued on a Monthly Basis through Offer for Subscription
  • Subscription Period: The offer will be open for 5 days from the date of announcement.
  • Secondary Market: Investors will have an opportunity to buy and sell the bonds on the floor of the Nigerian Stock Exchange (NSE) through Forthright Securities & Investments Limited for investors that intend to exit before maturity of the instrument.

 

BENEFITS TO THE INVESTOR

  • Fixed Return/Cash flow: Quarterly interest is paid directly into the bondholder’s account
  • Guaranteed Coupon: Offers fixed rate of interest over a fixed period of time and encourages financial inclusion among low income households.
  • Decent Return: A competitive fixed interest rate when compared to interest earned on Banks Savings Accounts.
  • Planning: It enables individuals to save towards personal projects.
  • Liquidity: Easy exit, as it would be traded on the NSE although introduces an element of volatility.
  • Tax Exempt: The interest income earned from the Savings Bonds are tax exempt i.e. the coupon is not subject to Withholding Tax.
  • Collateral: The FGN Savings Bonds Certificates can be used as collateral for securing loan facility.

 

THE NEW MARKET STRUCTURE

With the introduction of FGN Savings Bonds, the FGN securities market has been restructured to accommodate retail product: The new structure is as follows:

 

  • FGN Savings Bonds - minimum subscription N5,000.00 (with additional investments in multiples of N1,000.00) and subject to a maximum subscription of N50, 000,000.00
  • Nigerian Treasury Bills - minimum subscription N50, 001,000.00
  • FGN Bonds - minimum subscription N50, 001,000.00
     
FGN SAVINGS BOND ALLOTMENT RESULTS (APRIL 2017)
  12.794 % FGNSB APR 2019 13.794% FGNSB APR 2020
Offer Period April 3-7, 2017 April 3-7, 2017
Tenor 2 yrs/ 3 yrs April 12, 2017 April 12, 2017
Settlement Date 12.794% 13.794%
Coupon 12.794% 13.794%
Tenor 2 Years 3 Years
Total Amount Allotted N419.33 Million N868.69 Million

Total No of Successful
Subscriptions

841 957

 

To download the form Click the link below:

 

http://www.forthrightsec.com/cms/images/downloads/FGNSB%20Subscription%20Form.pdf