The Federal Government has returned to the domestic debt market, offering three Federal Government of Nigeria (FGN) bonds valued at a total of ₦900 billion for public subscription at ₦1,000 per unit, in a move that underscores a growing reliance on high-interest borrowing.
According to a statement issued by the Debt Management Office (DMO), the first instrument on offer is a February 2031 FGN bond, a seven-year re-opening, valued at ₦300 billion and carrying an interest rate of 18.50 per cent per annum.
The second is a February 2034 FGN bond, a 10-year re-opening, worth ₦400 billion, with an annual interest rate of 19.00 per cent.
The third offer is a February 2035 FGN bond, also a 10-year re-opening, valued at ₦200 billion and carrying a significantly higher interest rate of 22.70 per cent per annum.
The DMO explained that as re-openings of previously issued bonds, successful bidders would be required to pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, in addition to any accrued interest on the instruments.
It stated that interest on the bonds is payable annually, while repayment of the principal will be made in full on the maturity date.
The office noted that the bonds are backed by the full faith and credit of the Federal Government and are charged upon the general assets of the federation.
According to the DMO, the instruments qualify as securities in which trustees are permitted to invest under the Trustees Investment Act and are also recognised as government securities under the Company Income Tax Act and Personal Income Tax Act, making them tax-exempt for pension funds and some other categories of investors.
It added that the bonds are listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange and qualify as liquid assets for banks in the computation of liquidity ratios.