Wale Edun the Minister of Finance and Coordinating Minister of the Economy, announced that Nigeria’s first-ever foreign-currency domestic bond has received subscriptions totaling $900 million.
Speaking about the outcome of the groundbreaking bond issuance on Tuesday, Wale Edun pointed out that the oversubscription demonstrates investors’ confidence in Nigeria’s economic stability and potential for growth.
“The issuance of this inaugural domestic FGN US Dollar Bond highlights the continued faith investors have in Nigeria’s economy,” Edun said.
The bond attracted a wide range of investors, including Nigerians both locally and abroad, as well as institutional investors. The proceeds from the bond will be allocated to critical economic sectors, as approved by President Bola Ahmed Tinubu.
The $500 million domestic FGN US Dollar Bond, with a five-year maturity and a 9.75% coupon, is the first tranche of a $2bn bond programme registered with the Securities and Exchange Commission. The structure of the bond allows the government to absorb oversubscriptions up to the full $2bn programme limit.
The Director-General of the Debt Management Office, Patience Oniha, described the bond’s success as a pivotal moment for Nigeria’s economic development. She noted that the $900m raised from diverse investors underscores the growing sophistication of Nigeria’s domestic fixed-income market.
FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN) issued by the Debt Management Office (DMO) for and on behalf of the Federal Government. The FGN has an obligation to pay the bondholder the principal and agreed interest as and when due.
When you buy FGN Bonds, you are lending to the FGN for a specified period of time. The FGN Bonds are considered as the safest of all investments in domestic debt market because it is backed by the ‘full faith and credit’ of the Federal Government, and as such it is classified as a risk free debt instrument. They have no default risk, meaning that it is absolutely certain your interest and principal will be paid as and when due. The interest income earned from the securities are tax exempt.
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