The Federal Government of Nigeria has announced new identification requirements for subscribing to its latest financial instrument, the Domestic FGN US Dollar Bond, which was launched on Monday.
According to a Frequently Asked Questions document released by the Debt Management Office on its website, Nigerian citizens, including those living abroad, must have both a Bank Verification Number and a National Identification Number to participate in the bond offering. The bond is part of a $2 billion program, with the first tranche aiming to raise $500 million from both local and international investors.
Eligible participants include Nigerians residing in Nigeria, Nigerians in the diaspora with foreign currency savings, and foreign institutional investors. The FAQ specifies that Nigerians living abroad can apply for a BVN and NIN if they do not already possess them.
The FAQ also emphasizes that subscription payments for the Domestic FGN US Dollar Bond must be made through electronic transfers into designated accounts; cash payments are not accepted. Subscriptions can be made electronically or through financial institutions, and if using funds from a domiciliary account, those funds must have been held in the account for at least 30 days prior to application.
The bond, offering a 9.75% annual coupon rate over a five-year period, targets both domestic and international investors with a minimum subscription amount set at $10,000. This lower entry threshold differentiates it from traditional Eurobonds, which typically require a minimum investment of $200,000.
In addition, the bond will be included in the Central Bank of Nigeria’s liquidity ratio calculations and is suitable for pension fund portfolios. Income from these bonds is exempt from several taxes, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax.
The bonds will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, allowing investors to trade before maturity. The auction for this bond will remain open until August 30, 2024, with a settlement date set for September 6, 2024.
Finance Minister and Coordinating Minister of the Economy, Wale Edun, stated that the $500 million raised from this bond would bolster external reserves and help stabilize the foreign exchange situation in Nigeria. The government aims to double its target to $1 billion in subscriptions through this bond auction.
