Everything You Need To Know About The FGN Dollar Bonds

Yemi

— 2 min read
Everything You Need To Know About The FGN Dollar Bonds

We are pleased to announce that we are adding the FGN Dollar bond to the list of assets on our platform. As promised, we are committed to bringing you the best investment opportunities across the country and beyond.

WHAT IS A BOND?

A bond is a debt investment where an investor loans money to an entity (such as a government or corporation) for a defined period at a fixed interest rate. In return, the entity agrees to pay the investor regular interest payments (called coupons) over the life of the bond and repay the principal amount (the initial loan) at maturity. Bonds are considered a safer investment compared to stocks because they provide predictable income and the return of principal, making them attractive for conservative investors seeking steady returns. 

WHAT IS FGN DOLLAR BOND?

The Federal government of Nigeria (FGN) has issued its first foreign currency issued domestic bond, the offer is made under the authority of the Debt Management Office and is aligned with the Presidential Executive Order on the Foreign Currency Denominated Financial Instrument Local Issuance Programme.

This bond is a government-backed financial instrument issued in accordance with Nigerian law and recent executive orders to raise capital in U.S. dollars within the domestic market.

BOND DETAILS:

  • Bond Tenor: 5-years, the bond will mature in 2029, with a bullet repayment, meaning the principal will be repaid in full at maturity, with no principal repayments until the maturity date in 2029.
  • Bond Yield: 9.75% per annum 
  • Bond Series: Series 1 Domestic FGN USD Bond
  • Raise Amount: $20k.
  • Interest (Coupon) Payments: Interest will be paid monthly, offering investors a regular income stream.

SUBSCRIPTION TERMS:

  • Minimum Investment: USD 100
  • Investment Type: Fixed Interest Investment
  • Currency: USD
  • Eligible Investors: All Nigerian residents, Nigerians with savings abroad, the Nigerian Diaspora, and Qualified Institutional Investors.

KEY BENEFITS:

  • Investment Qualification: The bond qualifies as a security under the Trustee Investment Act, it also qualifies as a government security under the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), offering tax exemptions for pension funds and other investors.
  • Predictable Passive Income: The returns on a bond are known upon investment, and are hence guaranteed to get to investors on an agreed payment schedule. 
  • Liquidity: The bond is a liquid asset listed on AssetBase, it can be easily traded on the secondary market and provides liquidity for investors.
  • Low risk: The bond is backed by the full faith and credit of the Federal Government of Nigeria, meaning it is considered a low-risk investment due to the government's obligation to repay it.

Key Dates:

  • Closing Date: August 29th, 2024

This bond offer represents an opportunity for investors to participate in a government-backed financial instrument with a fixed income over five years. The involvement of established financial institutions and the full faith and credit backing by the Nigerian government further enhance the bond's attractiveness as a secure investment option.

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