NGX welcomes investors as DMO puts two FGN bonds on market list

BY CHARLES ABUEDE

The Nigerian Exchange Limited (NGX) has opened its welcoming arms to investors with keen interest in government backed securities following the offering by the Debt Management Office (DMO) of two new Federal Government of Nigeria (FGN) bonds for subscriptions.

The bonds are a 2-Year FGN Savings Bond due April 13, 2024, and a 3-Year FGN Savings Bond due April 13, 2025, and they are being offered at interest rates of 7.338 percent per annum and 8.338 percent per annum, respectively.

The debt office, through an announcement following the release of its FGN bonds issuance calendar for the second quarter of 2022, said bonds’ sale opened April 4, and would close April 8, adding that the interest will be paid quarterly, with a redemption bullet repayment on the date of maturity as the coupon payment dates are July 13, October 13, January 13 and April 13.

According to details obtained from the website of the DMO, the offer comes at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1000 thereafter, subject to a maximum subscription of N50 million. It also says the bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

“They qualify as Government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) and for Tax Exemption for Pension Funds, among other investors. They are listed on The Nigerian Stock Exchange and qualify as a liquid asset for liquidity ratio calculation for banks,” it said.

In another development, the DMO, following the release of the bond FGN bond issuance calendar on Monday, said it is set to deepen the sovereign curve by introducing a new 10-year FGN bond where it is expected to offer bonds worth between N630 billion and N720 billion during the quarter through re-opening of 7-year issue worth between N210 billion and N240 billion, the new issue of 10-year (N210 – N240 billion), and the re-opening of 20-year (N210 – N240 billion) tenors.

As a follow-up to the above development, the FGN bonds secondary market closed on a negative note on Monday as the average bond yield across the curve cleared higher by 15 basis points to close at 10.82 percent from 10.67 percent on the previous day. Also, the average yields across the medium tenor and long tenor of the curve expanded by 24 basis points and 17 basis points, respectively. However, the average yields across the short tenor of the curve declined by three basis points.

From the level of activities witnessed on Monday, the 27-APR-2023 maturity bond was the best performer with a decrease in the yield by 5 basis points, while the 18-MAR-2036 maturity bond was the worst performer with an increase in the yield by 36 basis points.