FG To Earn N150 Billion From September Bond Market

In September 2024, the federal government plans to raise N150 billion from the bond market through the Debt Management Office (DMO).

The federal government is using this bond issue as part of its borrowing plan to close the budget deficit.

One of the lowest bond offerings of 2024 will be represented by the auction, which is set for September 23, 2024. Compared to the amount promised in August 2024, it is around 21% less.

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Bonds that were previously issued are being reopened with these offerings. Three of them are the 19.30% FGN APR 2029 (5-year bond) for N70 billion, the 18.50% FGN FEB 2031 (7-year bond) worth N50 billion, and the 19.89% FGN MAY 2033 (9-year bond) worth N30 billion.

The total offering of N150 billion, though smaller than earlier offers in the year, reflects the government’s measured approach to borrowing in light of its financial needs and weakening demand.

The bonds will be sold in units of N1,000 each, with a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.

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This relatively high threshold is designed to attract institutional investors such as pension funds, insurance companies, and other large-scale financial institutions, though high-net-worth individuals are also able to participate.

The bonds carry competitive interest rates with coupon payments of 19.30%, 18.50%, and 19.89% for the 5-year, 7-year, and 9-year bonds respectively, making them attractive for yield-seeking investors.

Given the maturity periods of 5, 7, and 9 years, these bonds offer investors options for medium to long-term investment horizons.