FG offers new retail savings bond with 13.01 percent coupon

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By Peter Egwuatu

THE Federal Government opened bidding, yesterday, for a new two-year savings bond. The Federal Government of Nigeria Savings Bond (FGNSB) is targeted at retail investors and carrying a coupon of 13.01 percent.

According to the Debt Management Office (DMO) the savings bond will help broaden the country’s funding base. It will be available for purchase on a monthly basis and has a maximum subscription of N50 million.

The bond will pay interest quarterly with a bullet repayment for principal at maturity. The initial offer will close on March 17, the DMO said.

It will be recalled that the Federal Government had proposed a budget deficit of N 2.36 trillion in the 2017 Appropriation Bill currently being considered by the National Assembly. Half of the deficit, according to the government, would be funded through domestic borrowings including the FGNSB.

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Outstanding local debt rose to N13.88 trillion last year from N8.83 trillion in 2015 and is set to increase further, as Nigeria’s economy grapples with its first recession in a quarter of century, caused by low oil prices.

The government has said it will raise N130 billion at its third domestic debt sale this year on March 15 and sell N1.13 trillion worth of treasury bills by the second quarter.

Reacting on the savings bond, Executive Director, Capital Market Division of Nigerian Stock Exchange, NSE, Mr. Haruna Jalo-Waziri said the Savings Bond which will open for subscription exclusively on the Nigeria Stock Exchange (NSE) will boost financial inclusion.

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