The Federal Government of Nigeria has announced specific identification requirements for its newly issued Domestic FGN US Dollar Bond.
According to a FAQ document on the Debt Management Office’s website, Nigerian citizens, both at home and abroad, must have a Bank Verification Number (BVN) and a National Identification Number (NIN) to subscribe to the bond.
The $500 million bond, part of a $2 billion program, is being issued domestically to attract $500 million from local and foreign investors in the first tranche, targeting Nigerians at home and abroad, as well as foreign institutional investors.
A part of the FAQ read: “A BVN and NIN are required for subscription. Nigerians in diaspora can apply for both BVN and NIN if they don’t already have them.”
The Nigerian government has approved a bond to finance key sectors of the economy, as recommended by the Minister of Finance.
The five-year bond offers a 9.75% annual coupon rate and is open to both domestic and international investors with a minimum investment of $10,000. Notably, this bond has a lower entry threshold compared to traditional Eurobonds, which typically require a $200,000 minimum investment.
It also meets the Central Bank of Nigeria’s (CBN) criteria as liquid assets, making it eligible for inclusion in banks’ liquidity ratio calculations, and is also suitable for pension fund portfolios.
The DMO’s FAQ reveals that income from these bonds is exempt from several forms of taxation, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, making them an attractive investment option.
Also, the bonds will be listed on the Nigerian Exchange Limited (NGX) and the FMDQ Securities Exchange Limited, offering liquidity to investors who wish to trade before maturity.
The auction for this bond will remain open until August 30, 2024, giving investors a sufficient window to participate in this offering.
The settlement date, when investors will have their purchases confirmed and interest will begin accruing, is set for September 6, 2024.
Minister of Finance Wale Edun stated that the $500 million domestic dollar bond will bolster external reserves and stabilize the country’s foreign exchange situation.
The Nigerian government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction.
