The Nigerian government, through the Debt Management Office, intends to raise N450 billion in January 2025 via its bond auction.
This is notably higher than the N360 billion offered in January 2024 and the N120 billion in December 2024
This initiative is designed to help bridge the fiscal deficit and meet the government’s financial obligations, while also offering investment opportunities to both institutional and individual investors.
The first FGN bond auction of 2025 includes both reopened and new bond issuances, aiming to appeal to a wide range of investor interests. One of the offerings is a five-year bond with a 19.30% coupon rate, originally issued in April 2029. Through this reopening, the government plans to raise N100 billion.
This bond could attract investors seeking relatively short-term investments with a high return, especially given the attractive coupon rate.
The reopening of existing bonds can also offer liquidity to investors who may have previously invested in the original issue.
The second offering in the January 2025 auction is a seven-year bond, initially issued in February 2031, with an 18.50% coupon rate. Through this, the government seeks to raise N150 billion.
The final offering is a new ten-year bond, the FGN January 2035 bond, with the goal of raising N200 billion. Together, these bonds form a significant part of the government’s domestic borrowing strategy.
The auction will take place on January 27, 2025, with a settlement date of January 29, 2025. The settlement ensures that successful bidders gain ownership of the bonds shortly after the auction date, enabling them to start earning interest promptly.
These bonds are available in units of N1,000, with a minimum subscription requirement of N50,001,000. Investors can increase their subscriptions in increments of N1,000.
The bonds offer semi-annual interest payments, providing a steady income stream for bondholders.
At maturity, the bonds will be redeemed in full, ensuring a lump-sum repayment to investors.
One of the key advantages of these bonds is the tax benefits they offer. They qualify for tax exemptions for pension funds and other approved investors under the Company Income Tax Act and the Personal Income Tax Act.
The DMO has arranged for interested investors to participate in the bond auction through authorized Primary Dealer Market Makers.
These financial institutions, including prominent entities like Access Bank Plc, Zenith Bank Plc, Stanbic IBTC Bank Ltd, and United Bank for Africa Plc, will assist with the subscription process.
