Nigeria lures investors with higher yields on savings bond

The Federal Government of Nigeria Savings Bond offer has opened for February with a yield better than what the Debt Management Office offered in January to entice more Nigerians to invest in the bond.

Last month, the DMO had offered the two-year bond at 2.197 per cent while the three-year bond was offered at 3.197 per cent. The Bond Offer circular put yield on the two-year savings bond, which is redeemable in February 2023 at 4.214 per cent while yield on the three-year bond due in February 2024 is 5.214 per cent.

Although the allotment for the January bond had not yet been released, investors shunned the Savings Bond in December last year when yield was put at one per cent for both bonds.

Interest in the savings bond, which is aimed at small scale retail investors, began dwindling when yields dropped to single digit to dwindle as a total of N4 billion had been invested in the bond in the eight months, which auctions held last year.

Due to the Coronavirus Disease restrictions, the DMO did not hold bond auctions in April, May, June and July, while most states in the country had been on lockdown to curb the spread of the virus.

In 2019, the DMO had raised N5.762bn through the Savings Bond auction that held in the 12 months of the year.

Retail investors in the savings bond can get a minimum subscription of N5,000 per N1,000 per unit and in multiples of N1,000, thereafter subject to a maximum subscription of N50m.

The interest is payable quarterly with a bullet repayment on the maturity date. The FGNSB is set to close on February 5, 2021 with the settlement date slated for February 10. Coupon payment dates is also slated for May 10, August 10, November 10 and February 10.

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