News
FG Announces Investment Criteria for $500M Domestic Dollar Bond
The Federal Government has announced that investors interested in its new financial instrument must meet specific identification requirements.
This information is detailed in a Frequently Asked Questions (FAQ) document provided by the Debt Management Office (DMO) on its website.
To participate in the domestic dollar bond issuance, all Nigerian citizens—whether residing in Nigeria or abroad—must have a Bank Verification Number (BVN) and a National Identification Number (NIN).
The bond, part of a $2 billion program, aims to raise $500 million in this first tranche from both local and international investor EKO HOT BLOG gathered.
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Eligible investors include Nigerian residents, Nigerians in the diaspora with foreign exchange savings, and foreign institutional investors. The FAQ specifies that Nigerians abroad must obtain both BVN and NIN if they do not already have them.
Dollar
Subscriptions to the Domestic FGN US Dollar Bond cannot be made in cash. Payments must be made through electronic transfers into designated accounts. Funds used from domiciliary accounts must have been held for at least 30 days before the application date.
The bond, which offers a 9.75% annual coupon rate over five years, targets both domestic and international investors with a minimum subscription amount of $10,000. This is lower than the typical $200,000 required for Eurobonds.
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The bond qualifies as a liquid asset under Central Bank of Nigeria regulations, making it suitable for inclusion in banks’ liquidity ratios and pension fund portfolios. Income from the bonds is exempt from Companies Income Tax, Personal Income Tax, and Capital Gains Tax.
The bonds will be listed on the Nigerian Exchange Limited and FMDQ Securities Exchange Limited, providing liquidity for early trading. The auction remains open until August 30, 2024, with a settlement date of September 6, 2024.
Finance Minister Wale Edun stated that the $500 million domestic dollar bond will bolster external reserves and help stabilize the country’s foreign exchange situation.
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