FG set to sell $500m bonds, eyes 200% subscription

FG set to sell $500m bonds, eyes 200% subscription

The Federal Government of Nigeria has launched its Series I Domestic USD Bond, as it hopes to raise at least $500 million from local and international investors.

According to the auction circular seen by Nairametrics, the federal government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction.

However, this auction comes at a time when five of Nigeria’s Eurobonds were ranked among the worst performers in a Bloomberg index of emerging and frontier sovereign debt.

According to the circular, the bond program has a total size of up to $2.0 billion, which can be upsized depending on the issuer’s discretion.

The bond has a five-year tenor, offering a medium-term investment opportunity for investors looking for stable returns.

It was also stated that the bond’s coupon rate is benchmarked to comparable FGN Eurobonds yields, ensuring competitive returns that align with international market standards.

Interest payments will be made semi-annually, providing regular income streams to investors and enhancing the bond’s appeal.

The bond offers bullet repayment at maturity in US dollars, ensuring full repayment of the principal amount at the end of the five-year term.

FG to finance critical sectors with bond funds

The circular noted that the net proceeds from the bond will be ring-fenced and invested in critical sectors approved by the President on the recommendation of the Minister of Finance, subject to appropriation by the National Assembly (NASS).

It read: “As stated in the Presidential Executive Order, the net proceeds of the bonds and its accretion shall be ring-fenced and invested in critical sectors to be approved by the President on the recommendation of the Minister of Finance, subject to appropriation by the National Assembly (“NASS”).”

However, the government is yet to clarify the specific sector that will benefit from this financing.

The bond is exempt from income tax on the interest payable to bondholders. Additional exemptions are provided as specified in the exemption notice issued by the Federal Inland Revenue Services (FIRS).

The bond will be listed and admitted for trading on the Nigerian Exchange Limited (NGX) and the Financial Market Dealers Quotation (FMDQ), providing liquidity and accessibility to a broad range of investors.