Nigeria: Debt Management Office To Auction N150bn FGN Bonds

Nigeria’s Debt Management Office (DMO) says it will offer N150 billion bonds for subscription on November 17, 2021 on behalf of the Nigerian government.

In a circular issued on Thursday, the DMO noted that the bonds would consist of three equal tranches worth N50 billion each.

The first tranche is a 10-year reopening which will mature in January 2026 at the rate of 12.50%; the second is a 20-year reopening which will mature by April 2037 at the rate of 16.2499%; and the third is a 30-year reopening at the rate of 12.98%, to mature in March 2050.

According to the DMO, the auction date is set for November 17, 2021, and the settlement date is November 19, 2021.

The agency said the transactions will be at N1,000 per unit subject to a minimum subscription of N50,000,000 in multiples of N1,000 thereafter.

It also said that the interest can be paid semi-annually, and the redemption should be in bullet payment on the maturity date.

The circular reads, “For Re-openings of previously issued bonds (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.”

In October 2021, The Debt Management Office (DMO) issued a similar bond worth N150 billion for subscription by auction. The bonds were also listed in three tranches with 12.50%, 16.2499% and 12.98% for the 10 year, 20 year and 30 year re-opening respectively.

A bond is a fixed income instrument that represents loans made by an investor to a borrower. The borrower is usually corporate or government; in this case the Federal Government of Nigeria. It has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower.

Omotayo Araoye

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