Nigeria’s Debt Management Office Offers Two Savings Bonds To Investors

The Debt Management Office of Nigeria is, on behalf of the Federal Government, offering for subscription two savings bonds.

The first is a two-year Savings Bond due on May 12, 2023 at 7.753% per annum while the second is the three-year Savings Bond due May 12, 2024 at 8.753% per annum.

Each Savings Bond is offered at N1,000 per unit with a minimum subscription of N5,000 and a maximum subscription of N50 million.

The offer opened yesterday, May 3, 2021 and closes on May 7, 2021.

The Debt Management Office (DMO), which is the government agency established to centrally coordinate the management of Nigeria’s debt, is making the offer on behalf of the Federal Government in Pursuant to the Debt Management Office (Establishment) Act 2003 and the Local Loans.

According to its notice issued in Abuja, the DMO is authorized to receive applications for the Federal Government of Nigeria Savings Bond at the listed interest rates.

The settlement date for the bonds is May 12 and coupon payment dates are August 12, November 12, February 12, May 12.

Interest is payable quarterly and redemption is by bullet repayment on the maturity date.

As per the status of the bonds, they qualify as securities in which trustees can invest under the Trustee Investment Act. It also qualifies as government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds, among other investors.

The bonds are listed on The Nigerian Stock Exchange and they qualify as liquid asset for liquidity ratio calculation for banks.

Their security is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria because the issuer is Federal Government of Nigeria.

Interested investors are expected to contact the stock broking firms appointed as distribution agents by the Debt Management Office and the list of such agents is available on the DMO website – www.dmo.gov.ng.

There have been several responses to the DMO announcement of the current offer, particularly in the social media, with some Twitter users asking what use the investment would be in a country with multiple economic problems and poor investment climate, as well as what guaranty is available to convince investors that their investment is safe, in view of the insecurity issues currently bedeviling the country as one nation.

Patience Oniha
DG, DMO

The DMO was established on 4th October, 2000 to centrally coordinate the management of Nigeria’s debt, in order to avoid the uncoordinated fashion in which the country’s debt was being managed.

The need for the creation of a separate public debt management office was aimed at:

  • Achieving good debt management practices that make positive impact on economic growth and national development, particularly in reducing debt stock and cost of public debt servicing in a manner that saves resources for investment in poverty reduction programs;
  • Prudently raising financing to fund government deficits at affordable costs and manageable risks in the medium- and long-term;
  • Achieving positive impact on overall macroeconomic management, including monetary and fiscal policies;
  • Consciously avoiding debt crisis and achieving an orderly growth and development of the national economy;
  • Improving the nation’s borrowing capacity and its ability to manage debt efficiently in promoting economic growth and national development;
  • Projecting and promoting a good image of Nigeria as a disciplined and organized nation, capable of managing its assets and liabilities;
  • Providing opportunity for professionalism and good practice in nation building

 

IMAGE CREDIT: dmo.gov.ng

 

 

2 Comments on “Nigeria’s Debt Management Office Offers Two Savings Bonds To Investors”

  1. Nigeria is a super high risk for certain types of investments at this time if insecurity amid calls for separate countries. If the shit hit the fan, who’s to Honor the certificate? That’s if even the interest is higher than 7.75%

    1. Our policy inconsistencies will even make any serious person invest anything, except the person has an ulterior motive, like money laundering and so on. But that’s where we are.

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