FG puts N2trn bonds up for sale to raise fresh funds

The federal government is seeking to raise N2 trillion from investors through the sale of bonds in November as it looks to borrow more money to meet its financial obligations. A bond is essentially a loan taken by the government from investors, including banks, pension funds and individuals. In return, the government promises to pay them interest at agreed intervals and refund the money borrowed when the bond reaches its maturity date. The Debt Management Office (DMO), which manages the federal government’s borrowing, announced the offer as part of its November 2026 bond auction scheduled for November 16, with settlement fixed for November 18. The N2 trillion offer consists of four federal government of Nigeria (FGN) bonds with maturity dates ranging from March 2028 to May 2033. The bonds are being re-opened, meaning the government is offering more units of bonds that were issued previously, rather than introducing entirely new ones. The breakdown shows that N700 billion is being offered through the 21 per cent March 2028 bond, N250 billion through the 19.30 per cent April 2029 bond, N750 billion through the 17.945 per cent August 2030 bond and N300 billion through the 19.89 per cent May 2033 bond. The August 2030 bond accounts for the largest share of the offer at N750 billion. Investors who buy the bonds will receive interest payments twice a year until the maturity date, when the government is expected to repay the original amount invested. However, the interest rates printed on the bonds, known as coupon rates, are not necessarily the actual returns investors will earn. Their actual earnings depend on the price at which they buy the bonds. This is because government bonds can be bought and sold among investors before their maturity dates. The return an investor expects to earn by holding a bond until the government repays the principal is known as yield to maturity. The minimum investment is N50.001 million, while additional subscriptions can be made in multiples of N1,000. Investors can submit their bids through the DMO’s appointed banks. The bonds will also be listed on the Nigerian Exchange and FMDQ Securities Exchange, allowing investors to trade them before maturity. The latest offer comes as the Federal Government continues to rely on domestic borrowing to finance its spending and meet other financial commitments. Tags:

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