The Federal Government of Nigeria (FGN) has introduced a $500 million Domestic US Dollar Bond, an innovative financial instrument designed to support infrastructure development, promote financial inclusion, and strengthen the domestic securities market.
Enumerated below is a comprehensive overview of what the bond entails, its purpose, and how investors can participate.
1. Minimum Investment
A $10,000 minimum investment is required, with subsequent $1,000 increments.
2. Interest Rate
The bond offers a 9.75% interest rate that is paid out every six months. For a $10,000 investment, investors can expect to receive their principal back at the end of the term, along with $487.5 in interest paid every six months for five years.
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3. Eligible Investors
Nigerians, foreign nationals resident in Nigeria, Nigerians abroad, and Qualified Institutional Investors.
4. Issuance Duration
The duration of the offer is August 19–August 30.
5. Bond Tenor
The bond’s tenor is five years.
6. Bank Verification Number (BVN)
Investors must provide their BVN; this includes those who are abroad.
7. Tax Benefits
Capital Gains Tax, Personal Income Tax, and Company Income Tax do not apply to the bond’s interest.
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8. Investment Advantages
Interest rates for local investments are higher than those on domiciliary accounts. For Nigerians abroad, it provides higher returns than in their countries of residence.
9. Risk
Government securities are regarded as risk-free due to government backing.
10. Issuance Purpose
The bond seeks to promote financial inclusion, infrastructure growth, and the expansion of the domestic securities market. The proceeds will be invested in important economic sectors as approved by the president and National Assembly
11. Listing
The bond is listed on FMDQ OTC Securities Exchange Limited and Nigerian Exchange Limited (NGX).
12. Differentiation from Local FGN Bonds and Eurobonds:
While Eurobonds are issued overseas in foreign currencies and require a minimum subscription value of $200,000, domestic dollar bonds are issued locally in dollars with a $10,000 minimum investable amount.
