The Federal Government of Nigeria has successfully issued a $500 million domestic dollar bond with an appealing interest rate of 9.75% for investors.
This maiden bond in Nigeria’s capital market is intended to fund infrastructure development, increase financial inclusion, and enhance the domestic securities market.
Below is a list:
Minimum investment
The minimum commitment is $10,000, with $1,000 increments afterward.
Interest Rate
The bond’s interest rate is 9.75 percent, paid semi-annually. For a $10,000 investment, investors will get $487.5 in interest every six months for five years, with the principal repaid at the conclusion of the term.
Issuance Purpose
The Federal Government’s domestic dollar bond, a $2 billion scheme to be issued in four tranches of $500 million each. The bond intends to promote infrastructural development, financial inclusion, and the expansion of the local securities market. The earnings will be invested in important sectors of the economy, pending presidential approval and National Assembly appropriation.
Eligibility
Eligible investors include Nigerians, non-Nigerians residing in Nigeria, Nigerians in the diaspora, and Qualified Institutional Investors.
Duration of issuance
The promotion was valid from August 19 until August 30.
Bond Tenor
The bond has a five-year term.
Tax benefits
Bond interest is exempt from corporate income tax, personal income tax, and capital gains tax.
Investment Advantages
Local investors benefit from better returns than domiciliary account interest rates. For Nigerians in the diaspora, the returns are higher than in their home countries.
Risk
Government securities are deemed risk-free since they are backed by the government.
Listing
The bond is listed on both the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange Limited.
Financial Advisors and Issuing
Houses Meristem Capital Limited, Stanbic IBTC, and Vetiva are the issuing houses, with United Capital taking the lead. The African Finance Corporation serves as the global coordinator, with Constant Capital and Iron Capital as financial advisers.
Difference between Domestic Dollar Bonds and Eurobonds
Domestic Dollar Bonds are issued locally in dollars with a minimum investment of $10,000, whilst Eurobonds are issued abroad in foreign currencies with a minimum subscription value of $200,000. The domestic bond not only lowers the entry hurdle for thousands of Nigerians, but it also provides investors with higher yields on Nigerian Eurobonds.
The coupon for the five-year domestic dollar bond is 9.75 percent, which is higher than the 9.58 percent return on the Federal Government’s $1.25 billion 2029 Eurobond, which expires in five years. The FGN bonds are local bonds denominated in naira, therefore the interest and capital are paid in naira.
Payment Method
Capital and interest payments are made in dollars through Nigeria’s banking system and electronic transfers.
Bank Verification Numbers (BVN)
Investors, even those in the diaspora, must produce their BVN.
Payment Method
Capital and interest payments are made in dollars through Nigeria’s banking system and electronic transfers.
