The Federal Government of Nigeria is poised to launch a $500 million domestic bond on Monday, August 19th, marking a significant financial initiative aimed at strengthening the nation’s economy.
At the roadshow held in Lagos on Thursday, Finance Minister and Coordinating Minister of the Economy Wale Edun outlined the initiative as a key component of the government’s strategy to mobilize resources for national development and enhance economic stability.
He emphasised that the bond, which is tax-exempt, offers numerous benefits, including safety and security, diversification opportunities, and a predictable cash flow. It is also designed to support the development of the domestic capital market and enhance asset liquidity.
Edun highlighted that the bond targets Nigerians both domestically and in the diaspora, as well as non-Nigerians living in Nigeria. “For those in the diaspora who believe in Nigeria’s economic potential, this bond offers an opportunity to contribute to the nation’s growth and competitiveness. Similarly, Nigerians residing in the country with savings abroad can now invest in a well-structured, profitable asset,” he said.
The five-year bond, issued at par on a fully paid basis, will provide semi-annual payments and is intended to fund key sectors critical to economic development and revenue enhancement. Gabdebo Adenrele, Managing Director of Investment Banking at United Capital, detailed the bond’s features, noting that it will be listed on both the Nigerian Exchange Group (NGX) and FMDQ Securities Exchange, utilizing existing market infrastructure.
The principal repayment will be in US dollars at the end of the term, with all transactions, including interest payments and insurance, conducted in dollars.
The bond is backed by Federal Government securities and is open to both Nigerian and non-Nigerian investors.
“This is the first issuance in dollars, featuring a semi-annual coupon structure. The bond will be invested in key sectors approved by the president, with recommendations from the Finance Minister and ratification by the National Assembly,” Adenrele added.
The minimum investment amount is set at $10,000, with additional increments of $1,000, allowing broader participation. The bond is also eligible for pension fund investments, offering the same tax-exempt benefits as other Federal Government securities.
The bond underscores the government’s commitment to improving external reserves and stabilising the exchange rate, both critical for economic stability and investment. By increasing the flow of dollars into the economy, the bond aims to strengthen the exchange rate, reduce inflation, and support job creation and poverty reduction.
Given the global financial market challenges and Africa’s drive for self-reliance, the Minister views the bond as a strategic move for Nigeria to leverage domestic savings and enhance its global competitiveness. The initiative aligns with broader economic policies of the Federal government of Nigeria aimed at reducing poverty, creating jobs, and stimulating investment.
Mosunmola Ogi-Olu
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