The Federal Government of Nigeria (FGN), through the Debt Management Office (DMO), has announced a new bond auction targeted at raising 350 billion naira
This figure is lower than the N450 billion that was offered in the previous month’s auction for FGN bonds held in January 2025.
The auction is scheduled for today, February 24, 2025, and will involve the reopening of two bonds that were issued earlier.
These include the 19.30% FGN April 2029 bond, with a total offer size of N200 billion, and the 18.50% FGN February 2031 bond, with a total offer size of N150 billion. The settlement date for successful bids is set for February 26, 2025.
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This issuance is part of the government’s ongoing strategy to raise long-term funds to support national expenditure and stimulate economic development.
The bonds are being offered in units of N1,000, with a minimum subscription requirement of N50,001,000 and subsequent investments required to be in multiples of N1,000.
However, the actual price paid by successful bidders will depend on the yield-to-maturity bid that clears the auction volume. Investors will also be required to pay any accrued interest on the bonds from the last coupon payment date up to the settlement date.
The bonds qualify as government securities under Nigerian tax laws, making them attractive to a wide range of investors. Under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), these bonds are eligible for tax exemptions for pension funds and other qualified institutional investors.
This tax advantage enhances the appeal of FGN Bonds, particularly for long-term investors seeking stable returns with minimal tax liabilities.
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In addition to their tax benefits, the bonds qualify as securities in which trustees can invest under the Trustee Investment Act.
This classification allows pension funds, insurance companies, and other institutional investors to allocate funds to these instruments with confidence in their security.
Furthermore, the bonds are listed on the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, providing liquidity for investors who may wish to trade their holdings in the secondary market.
