DMO opens bonds offer for September with Interest at 18.20% 

The Federal Government of Nigeria, through the Debt Management Office (DMO), has opened offers for subscription to Federal Government of Nigeria (FGN) savings bonds for September 2024.  

According to a statement by the DMO, the subscription period will last for five days, starting from September 2nd. 

The statement indicates that the two-year savings bonds, maturing on September 11, 2026, are offered at an interest rate of 17.202%, while the three-year savings bonds are available at 18.202%. 

Each unit of the bond is priced at N1,000, with a minimum subscription requirement of N5,000 and subsequent multiples of N1,000. The maximum allowable subscription is N50,000,000.  Interest payments on FGN bonds are made quarterly (four times a year).  

The subscription period for these bonds commenced on September 2, 2024, and will remain open until September 6, 2024, according to an announcement by the DMO.  

Settlement is planned for September 11, 2024, with quarterly coupon payments scheduled for December 11, March 11, June 11, and September 11. 

Increased interest rate 

The interest rate of 18.202% on FGN savings bonds stands as one of the highest in recent times and reflects the prevalent high-interest rate environment in the country. In the same month of last year, the interest rate on FGN savings bonds for September 2023 was offered at an interest rate of 12.031% representing an increase of 6.17 percentage points in one year. 

The increase in interest rate for FGN bonds is due to the actions of the Central Bank of Nigeria (CBN) since February when it began its rising interest rate to stem inflation and stabilize the forex market by attracting Foreign Capital Investments (FPIs). 

The apex bank over four Monetary Policy Committee (MPC) meetings has raised interest rates by 800 basis points to control inflation. This has resulted in significant interest in the FGN savings bonds offer.  

Result of FGN bond auction for August 

• In August, the Federal Government of Nigeria raised N374.751 billion through its FGN bond auction, demonstrating continued strong investor interest in longer-term securities. 
• The auction featured three distinct bonds with tenors of 5 years, 7 years, and 9 years, marking a crucial step in Nigeria’s efforts to secure funding for ongoing national projects. 
• The 9-year bond stood out as the favourite among investors, with an impressive subscription of N375.083 billion, far exceeding the offered amount of N50 billion. The bond was allotted N314.213 billion at a marginal rate of 21.50%, indicating a substantial oversubscription of 650.17%.