By Milcah Tanimu
To tackle the 2024 budget deficit, the Nigerian government plans to raise N150 billion from the bond market this September. The Debt Management Office (DMO) will conduct the auction on September 23, 2024, with settlement set for September 25, 2024. This offering is about 21% smaller than the N190 billion offered in August 2024.
The government will offer bonds including a N70 billion tranche of the 19.30% FGN APR 2029 (5-year bond), a N50 billion tranche of the 18.50% FGN FEB 2031 (7-year bond), and a N30 billion tranche of the 19.89% FGN MAY 2033 (9-year bond).
This smaller offering reflects the government’s cautious borrowing strategy amid financial constraints and lower demand.
The bonds will be available in units of N1,000 each, with a minimum subscription of N50,001,000. The high threshold targets institutional investors, such as pension funds and insurance companies, as well as high-net-worth individuals.
Investors will find attractive rates: 19.30% for the 5-year bond, 18.50% for the 7-year bond, and 19.89% for the 9-year bond. These bonds provide medium to long-term investment options with semi-annual interest payments and bullet repayments at maturity.
The settlement will occur on September 25, 2024. The Federal Government of Nigeria backs these bonds with its credit and secures them with the country’s general assets. Investors can trade them on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, ensuring liquidity. They also qualify as investments under the Trustee Investment Act and as liquid assets for banks under liquidity ratio requirements.
