Federal Government Successfully Lists N4.214 Billion April 2024 Savings Bonds on NGX

The Federal Government of Nigeria has announced listing N4.214 billion of its April 2024 Savings Bonds on the Nigerian Exchange Ltd. (NGX) platform.

Godstime Iwenekhai, Head of NGX's Issuers Regulation Department, announced the listing in a market bulletin yesterday.

According to Iwenekhai, the bond's specifications called for a 17.046% coupon rate and an FGS of 1.228 million units, valued at N1.228 billion, by April 2026.

He also stated that FGS April 2027, totaling 2.986 million units, was also listed and, at an 18.046% coupon rate, had a total value of N2.986 billion.

He continued by saying that the bonds were backed by the full confidence and credit of the Federal Government and were charged against Nigeria's general assets, as specified by the debt office.

 He said: "Trading license holders are hereby notified that the April 2024 issue of the Federal Government of Nigeria (FGN) Savings Bonds was listed on NGX on May 13.

 "FGN Savings Bond is issued monthly in tenors of two and three years with quarterly payment of coupons (interest) at a predetermined rate published by the DMO every month."

Iwenekhai also described how the Debt Management Office (DMO), acting on behalf of the federal government, introduced the retail savings bond product in 2017 to guarantee the ongoing growth of the home market by democratising its operations in the bond market and making it available to Nigerians.

 He said: "The product is also aimed at bridging the infrastructure deficit, which has been a constraint to economic growth.

According to NGX's statement, the bulletin noted: "Trading License Holders are hereby notified that the April 2024 Issue of the Federal Government of Nigeria (FGN) Savings Bonds was listed on Nigerian Exchange Limited (NGX) on May 13, 2024."

About FGN Bonds

FGN Bonds are debt securities issued by the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria (FGN). When the principal and agreed-upon interest are due, the FGN must pay the bondholder. You are lending money to the FGN for a predetermined amount of time when you purchase FGN Bonds. Because the Federal Government's "full faith and credit" is behind them, the FGN Bonds are regarded as the safest investments available in the domestic debt market because they carry no risk. Because there is no default risk, you can be positive that your principal and interest will be paid on time. The interest received from the securities is not subject to taxes.

Reasons Why the Federal Government of Nigeria Issues Bonds?

The Federal Government of Nigeria (FGN) issues Bonds for the following reasons:

  • To provide a sustainable and non-inflationary means of funding government budget deficits.

  • To improve the government's financial discipline.

  • To repay maturing federal government debt obligations.

  • To create a benchmark yield curve used as a guide for bond pricing from other entities, particularly private sector issuers.

  • To create and maintain long-term liquidity in the domestic bond market.

  • To improve and expand the public's savings and investment options.

  • To maintain the growth of additional bond market segments.

  • To increase the variety of sources of government funding.

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