FG Offers 16.67%, 17.67% Returns on New Savings Bonds

The federal government yesterday opened application list for the first debt issuance in the second half with the launch of the July 2024 tranches of its monthly retail bond issuance, otherwise known as Federal Government of Nigeria Savings Bond (FGNSB).

The Debt Management Office (DMO), which oversees government’s debt issuance and management, is offering two tranches of FGNSBs with two-year and three-year tenors. The July 2024 issuance is the 85th tranche of the savings bond, introduced in 2017.

The government is offering the two-year sovereign retail bond at a coupon of 16.668 per cent with maturity on July 10, 2026.

It is also simultaneously offering three-year FGNSBs at a coupon of 17.668 per cent with maturity on July 10, 2027.

Minimum subscription to the pro-low savers bonds is N5,000 with maximum subscription per subscriber capped at N50 million. Application list for the bonds, which opened yesterday, closes on Friday July 5, 2024, with settlement date on Wednesday July 10, 2024.

The FGNSBs are designed to have most of the features of the existing sovereign bond but with other benefits to the bondholder, including low amount of minimum subscription, listing on stock exchange and trading on the bonds.

It will also be backed by the full faith of the Federal Government of Nigeria and is therefore deemed risk-free.

The coupon is paid on a quarterly basis, providing investors with a regular stream of incomes. The coupon payment dates for the bonds being issued are October 10, January 10, April 10 and July 10.

The FGNSB was introduced in 2017 as a mass instrument for nationwide mobilization of savings and investments. Minimum subscription to the FGNSB is usually N5, 000 while the bond pays coupon or interest rate on a quarterly basis.

Usually, the minimum subscription to the bonds, offered at N1,000 per unit, is N5,000 or five units and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.

GTI Securities Limited, one of the authorised distribution agents for the FGNSB, had explained that the savings bonds help to deepen national savings culture while providing opportunity to all Nigerians irrespective of income level to contribute to and benefit from national development.

According to the stockbroking firm, FGNSB enables all Nigerians opportunity to participate in and benefit from the favourable returns available in the capital market.

GTI Securities noted that the savings bonds are acceptable as collateral for loans by banks and can be sold for cash in the secondary market before maturity.

The bonds are usually listed on the stock exchange for trading, thus providing liquidity for investors who want to exit before maturity.

Savings bonds are good for savings towards retirement, marriage, school fees and house projects among other targets while assuring on its safety as the bonds are backed by the full faith and credit of the Federal Government of Nigeria.