The Federal Government, on Wednesday, September 18, 2019, listed savings bonds valued at N296 billion on the Nigerian Stock Exchange (NSE). This was disclosed in a notification to the dealing members of the Nigerian capital market.
Breakdown: The bonds listed in separate tranches saw the series 60 bonds, which is expected to mature by September 2021 listed at a rate of 11.195%, while the series 61 bonds, which is expected to mature by September 2022 was listed at a rate of 12.195%.
While the series 60 bonds listed 91,112 number of units, the series 61 listed 204,827 number of units.
Prior to this development, the Federal Government had opened its September 2019 savings bond offer for investors. The savings bond auction, commenced on Monday, September 2, 2019, and closed on Friday, September 6, 2019.
According to the Debt Management Office (DMO), the interest on the savings bond is payable quarterly, with dates fixed on December 11, 2019, March 11, 2020, June 11, 2020, and September 11, 2020. The DMO said the bonds were offered at N1,000 per unit, subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.
Understanding Bonds: A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and the borrower that includes the details of the loan and its payments. A bond has an end date when the principal of the loan is due to be repaid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower.
Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.