Federal Government to Raise ₦200bn via Bond Auction

The Debt Management Office (DMO) has announced plans to raise ₦200 billion through a bond auction scheduled for Monday, with settlement expected on Wednesday.

The offer consists of two instruments: a reopening of the June 2032 bond with a coupon rate of 17.95 percent, and a new five-year FGN AUG 2030 bond worth ₦100 billion, for which the coupon rate is yet to be set.

The minimum subscription is ₦5,000, with additional investments allowed in multiples of ₦1,000, up to a maximum of ₦50 million. Interest will be paid semi-annually.

Earlier in August, the government floated two- and three-year savings bonds offering interest rates of 14.401 percent and 15.401 percent respectively. Investor appetite has remained strong, with July’s auction attracting 109 bids for the June 2032 instrument, of which 59 were successful.

A total of ₦172.5 billion was allotted for the 2032 bond and ₦13.43 billion for the April 2029 bond. Successful bids were awarded at marginal rates of 15.69 percent and 15.90 percent respectively, though original coupon rates of 19.30 percent (2029) and 17.95 percent (2032) were maintained.

According to analysts at United Capital, FGN bonds offer attractive returns compared to traditional savings accounts. The bonds are also tax-free, can serve as collateral for loans, and are considered risk-free as they are backed by the Federal Government.