The Federal Government of Nigeria has unveiled a new financial instrument, the Domestic FGN US Dollar Bond, and has outlined the specific requirements for eligible investors. In a bid to raise $500 million in the first tranche of a $2 billion program, the government is inviting both domestic and foreign investors to participate.
Eligibility Criteria and Subscription Process
To subscribe to the Domestic FGN US Dollar Bond, Nigerian citizens, including those residing abroad, must possess a Bank Verification Number (BVN) and a National Identification Number (NIN). The subscription process can be completed electronically or through financial institutions.
Key Eligibility Requirements:
To subscribe to the Domestic Dollar Bond, individuals must meet the following criteria:
Nigerian Citizenship: Both Nigerian residents and citizens residing abroad are eligible to participate.
BVN and NIN: All subscribers must possess a valid Bank Verification Number (BVN) and National Identification Number (NIN).
Electronic or Institutional Subscription: Subscriptions can be made electronically or through financial institutions.
Foreign Exchange Savings (For Nigerians in Diaspora): Those residing abroad must have foreign exchange savings in their domiciliary accounts for at least 30 days prior to the application date.
Bond Features and Benefits
The Domestic FGN US Dollar Bond offers several attractive features, including:
Tax Exemption: Income from the bond is exempt from various taxes, making it a potentially lucrative investment.
Liquidity: The bond will be listed on the Nigerian Exchange Limited (NGX) and the FMDQ Securities Exchange Limited, providing investors with liquidity options.
Accessibility: The bond has a lower entry threshold of $10,000 compared to traditional Eurobonds, making it more accessible to a wider range of investors.
Central Bank Recognition: The bond meets the Central Bank of Nigeria’s (CBN) criteria as a liquid asset, allowing banks to include it in their liquidity ratio calculations.
Subscription Details and Timeline
The subscription period for the Domestic FGN US Dollar Bond will remain open until August 30, 2024. Investors can submit their applications during this window.
The government has stipulated that all payments for the bond must be made electronically. Cash payments are not accepted.
The settlement date for the bond is set for September 6, 2024, which is when investors will have their purchases confirmed and interest will begin accruing.
Government’s Objectives
The Nigerian government aims to achieve several objectives through the issuance of the Domestic FGN US Dollar Bond:
Boosting External Reserves: The bond is expected to enhance the country’s foreign exchange reserves.
Stabilizing the Foreign Exchange Market: By attracting foreign capital, the government hopes to stabilize the foreign exchange rate.
Promoting Domestic Investment: The bond offers an opportunity for Nigerians to invest in a government-backed asset.
Read Also: Nigerian Passport Now Cost 35k and 100k, Effective September 1st
The government has set a target of $1 billion in subscriptions through this bond auction, which could be doubled depending on demand.
If You Ask Me
The launch of the Domestic FGN US Dollar Bond represents a significant development in the Nigerian financial market. By offering attractive terms and tax benefits, the government aims to attract both domestic and foreign investors. As the subscription period draws to a close, it remains to be seen how the bond will be received by the market and what impact it will have on the country’s economic outlook.
