Federal Government reportedly raises N4.2 billion from Nigerian savings bonds in April 2024

Investor response to the most recent Federal Government of Nigeria Savings Bonds (FGNSB) has been positive, with total allotments for the April 2024 issuance reaching over N4.2 billion.

Hundreds of investors participated, according to the Debt Management Office (DMO), demonstrating a high level of confidence in the stability and returns of government-backed assets.

The amount raised in April exceeded the amount raised in March by around 45 percent. About N2.9 billion worth of savings bonds were raised by the DMO in March 2024, with rates for the two-year and three-year bonds being 15.097% and 16.097%, respectively. 

Specifics of the April 2024 Issue

Two bonds, the FGNSB April 2026 and the FGNSB April 2027, having respective maturity periods of two and three years, were made available during the offer period from April 1 to April 5, 2024. Significant interest rates of 17.046% and 18.046%, respectively, were drawn to the bonds, sparking an intense bidding war.

While the FGNSB April 2027 had a more substantial allotment of N2.99 billion, its shorter-term cousin, the FGNSB April 2026, got a total allotment of N1.23 billion.

There were 558 successful subscriptions for the 2026 bond overall, compared to 952 for the 2027 bond, indicating a stronger investor preference for the latter.

These bonds were settled on April 9, 2024; the offers for each bond were meant to mature in April of 2026 and 2027, respectively.

These bonds’ quarterly coupon payments will increase their appeal to investors as a reliable source of income.

Implications for Investors

• This bond issue’s performance is a resounding sign of the strong demand from investors for Nigerian sovereign debt, which reflects confidence in the country’s economic and fiscal policies.
• Furthermore, the substantial allotments and high participation rates provide a reliable gauge of market liquidity and investor faith in the stability of Nigeria’s financial instruments. 
• This invention represents a significant opportunity for individual and institutional investors to lock in favorable interest rates with government-backed security.
• In addition to offering favorable returns, investing in FGNSB offers a secure investment option and helps to finance national development initiatives.

What you need to note

• The Debt Management Office (DMO) of the federal government made offers for the April 2024 Savings Bond, with rates as high as 18.046% annually, according to a previous article published in the News Chronicles.
• The DMO announced that the annual yield on the two-year FGN Savings Bond will be 17.046%, while the annual yield on the three-year FGN Savings Bond will be 18.046%.
• Each unit costs N1000, with a minimum subscription of N5,000 and subsequent multiples of N1,000, up to a maximum subscription limit of N50,000,000. The DMO issues them on a monthly basis.