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Tag: FGN Bonds

  • Fed Govt offers N300b in bond reopening for March

    Fed Govt offers N300b in bond reopening for March

    The Federal Government has announced an offer for subscription by auction of two re-opened Federal Government of Nigeria (FGN) bonds totaling N300 billion.

    In a statement, the Debt Management Office (DMO) said the bonds are part of the government’s domestic borrowing strategy, aimed at financing budget deficits and supporting infrastructure development.

    The DMO is offering two bonds for subscription atN200,000,000,000.00 – 19.30per cent FGN APR 2029 (5-year re-opening); N100,000,000,000.00 – 19.89per cent FGN MAY 2033 (nine-year re-opening

    The auction is scheduled for March 24, 2025, with a settlement date of March 26, 2025.

    Both bonds are re-openings of previously issued bonds, meaning the coupon rates have already been set. Investors will pay a price corresponding to the yield-to-maturity bid that clears the auction volume, plus any accrued interest on the instrument.

    The bonds are sold at N1,000 per unit, with a minimum subscription of N50,001,000 and multiples of N1,000 thereafter with interest payable semi-annually, providing a steady income stream for investors.

    The bonds will be repaid in full (bullet repayment) on their respective maturity dates.

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    The bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

    They also qualify as government securities under the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA), making them tax-exempt for pension funds and other investors. Additionally, the bonds are listed on the Nigerian Exchange Limited (NGX) and FMDQ OTC Securities Exchange, ensuring liquidity and transparency.

    With interest rates of 19.30per cent for the five-year bond and 19.89per cent for the nine-year bond, these securities offer competitive returns compared to other fixed-income instruments in the market.

    The bonds are exempt from taxes, making them particularly attractive to pension funds and other institutional investors seeking tax-efficient investment options.

    As listed securities, the bonds can be easily traded on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, providing investors with liquidity and flexibility.

    Backed by the full faith and credit of the Federal Government of Nigeria, the bonds are considered low-risk investments. They are also charged upon the general assets of Nigeria, further enhancing their security.

    The auction will be conducted on March 24, 2025, with successful bidders required to settle their purchases by March 26, 2025.

  • Fed Govt offers N450b for subscription

    Fed Govt offers N450b for subscription

    The Federal Government has announced the offering of three Federal Government of Nigeria (FGN) bonds for subscription, with a combined value of N450 billion.

    This was disclosed in the January 2025 FGN Bond Auction Results issued by the DMO yesterday.

    The first bond on offer is a N100 billion April 2029 FGN bond, with a 19.30 per cent annual interest rate, marking a five-year re-opening of the bond. The second offer is a seven-year re-opening of a February 2031 FGN bond, valued at N150 billion, with an interest rate of 18.50 percent per annum.

    The third offer is a ten-year re-opening of a January 2035 FGN bond, valued at N200 billion. The auction for these bonds will take place on January 27, with a settlement date of January 29.

    The bonds are offered at a price of N1,000 per unit, with a minimum subscription of N50 million, and in multiples of N1,000 thereafter.

    The DMO clarified that for re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the auction volume, in addition to any accrued interest.

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    Interest on the bonds is payable semi-annually, with the principal sum set for bullet repayment upon maturity. These bonds are fully backed by the Federal Government, charged upon the general assets of Nigeria.

    They qualify as securities in which trustees can invest under the Trustee Investment Act and are also government securities within the Company Income Tax Act and the Personal Income Tax Act, making them eligible for tax exemption for pension funds and other related entities.

    Furthermore, the bonds are listed on the Nigeria Exchange Limited and qualify as liquid assets for the purpose of liquidity ratio calculations for banks.

    The DMO’s offering confirms the government’s determination to raising funds for key national projects and the N13 trillion 2025 budget deficit financing while providing attractive investment opportunities for both domestic and international investors.

  • DMO raises N215b from FGN Bonds

    The Debt Management Office (DMO) has raised N215 billion from the Federal Government of Nigeria (FGN) first monthly auction for the year.

    A report from FBN Capital, an investment and research arm of FBN Holdings, said the funds came at relatively high rates. It said although the debt office is once again running its auction programme without an approved FGN budget in place, it is in a more comfortable place than 12 months ago.

    “The marginal rates last week were slightly higher than the previous month: 13.38 per cent and 13.49 per cent for the five and 10-year benchmarks for July 2021 and March 2027 offers, compared with 13.19 per cent and 13.21 per cent,” it added.

    “In January 2017, the DMO raised N215 billion from the first monthly auction of FGN bonds of the year. Last week’s equivalent auction raised its target of N110 billion,” it said.

    The FBN Capital report, titled “Decent start to the year for the DMO”, explained that since the offers, there had been positive feedback from the market. It said there were indications that the FGN may raise another $2.5 billion from the sale of Eurobonds this quarter, and that the DMO would have a conversation with JP Morgan about the return of a selection of its FGN bonds to the bank’s indices for government issues in local currencies in emerging markets.

    Naira securities were removed from the JP Morgan Index in 2015 because of foreign-currency shortages, which led to volatility in the market. JP Morgan is the largest bank in the United States, the world’s sixth largest bank by total assets, with total assets of $2.5 trillion, and $28 trillion in assets under custody and administration.

    The report said decline in yields on FGN paper in the past four months amounted to plus or minus 350basis points for the bonds, which it argued may not be reflected in the 2018 budget proposals, which have total debt service at N2.03 trillion, excluding the sinking fund. “We have estimated the average cost of FGN borrowing in naira last year at 15.5 per cent, based upon debt service for the first nine months.”

    In addition to the momentum in its favour, the DMO appears to have a lower funding target for this  year. It raised N1.25 trillion net from the domestic market last year whereas the FGN deficit in the 2018 proposals is said to be N2 trillion and the strategy is to shift the balance towards external borrowing.

    Also, the DMO’s new calendar for first quarter of the year stated that investors would be offered two new issues, February 2028s next month and March 2025s at the auction in March. Its calendars are released after consultations with the investor base.

    JP Morgan Chase & Co plans to expand its African presence into countries, including Ghana and Kenya, Chief Executive Jamie Dimon said. “You will see us open in some countries we are not in, in Africa you will be hearing about some of that stuff,” Dimon said at last year’s World Economic Forum meeting in Davos, Switzerland.

     

  • PFAs invest 66.4% pension fund in FGN bonds, treasury bills

    PFAs invest 66.4% pension fund in FGN bonds, treasury bills

    But of the N5.219 trillion pension funds accumulated in November 2015, a total of N3.49 trillion was invested in Federal Government (FGN) Securities by Pension Fund Administrators (PFAs).

    This represents 66.41 per cent investment of the total fund in FGN Securities.

    On the other hand, N1.4 billion was invested in infrastructure funds in the month under review by the PFAs, indicating a 0.02 per cent investment out of the N5.219 pension funds.

    This was shown in the National Pension Commission (PenCom) Summary as at November 30, 2015.

    The report showed that N2.95 trillion was invested in FGN Bonds representing 56.16 per cent, while N480.26 billion was invested in Treasury Bills, representing 10.25 per cent of the fund.

    The PFAs however invested N157.13 billion in State Government Securities, N179.45 billion in Corporate Debt Securities and N12.69 billion Supra-National Bonds representing 3.14 per cent, 3.04 per cent and 0.22 per cent respectively.

    The report further showed that Local Money Market Securities received N516.18 billion representing 10.39 per cent. There was no trade at the Foreign Money Market Securities except in the Closed Pension Fund Assets (CPFAs) which has only N645 million representing a 0.01 per cent investment.

    Meanwhile, Real Estate Properties got N231.25 billion representing 4.5 per cent. Others like the Open/Close End funds, Private Equity, and Cash at Hand received N19.36 billion, N13.43 billion and N58.71 billion representing 0.42 per cent, 0.34 per cent and 0.70 per cent respectively.

    Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. Eguarekhide Longe said the larger chunk of the pension fund is invested in Federal Government bonds and Treasury Bills.

    He noted that the Federal Government is currently using the fund to finance recurrent expenditure.

    He stressed that contrary to claims that PFAs don’t want to invest pension fund to fix infrastructural deficit in the country, larger chunk of the money is already with the government.

    He said the pension fund operators are ready to assist the government with funding, provided the government floats infrastructure bonds to which the operator can invest in, noting that such infrastructure products must follow the investment guidelines in the Pension Reform Act(PRA) 2014.

    He said: “The fact is that there are ample provisions in the investment guidelines that allows for investment in projects, so to say, infrastructure, private equities and real estates, bonds, among others.

    “But what has happened is not that the money is idle in the PFAs or that the fund managers have not looked for those projects. In truth, it is not their job to go and create projects, but we have actively sought the investment banking community to develop products that we can invest in”, he noted.

  • PFAs invest N2.7tr in FGN bonds, bills

    PFAs invest N2.7tr in FGN bonds, bills

    About N2.7 trillion out of the N4.21 trillion pensions fund assets has been invested in FGN Securities as at March 31, 2014 by Pension Fund Administrators (PFAs), representing 63.39 per cent investment of the fund, The Nation has learnt.

    The PFAs also invested N602 billion in shares on the Nigerian Stock Exchange in the period under review. This represents a 14.3 per cent investment of the fund.

    The volume of traded shares in March was a little lower compared to the N619 billion traded as at February 28, 2014 out of the N4.12 trillion pension fund assets recorded in the month.

    This was revealed in a document obtained by The Nation from the National Pension Commission (PenCom) titled: ‘Summary of Pension Fund Assets as at March 31, 2014’.

    A breakdown of the report showed that a volume of Domestic Ordinary Shares of N548.7 billion was traded in March while Foreign Ordinary Shares of N53 billion was also traded.

    Similarly, N195.2 billion and N79.9 billion was invested in State Government Securities and Corporate debt securities respectively while N1.7 billion was invested in Supra-National bonds.

    A total of N228.4 billion was invested in the Real Estate Properties while N9.3 billion was invested in the Private Equity Fund.

    The report further showed that N335.2 billion was invested in the Local Money Market Securities, N286 billion in Foreign Money Market Securities and N22 billion in Open/Close End Funds.

    The Commission had N46.2 billion in cash and other assets during the period under review.

    The Acting Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, while speaking on Regulation on Investment of Pension Fund Assets said Pension Fund Custodians (PFCs) shall only take written instructions from licensed PFAs with respect to the PFAs investment and management of pension fund assets held in the custody of the Pension Fund Custodian (PFCs) on behalf of the Contributors.

    She said the PFCs, in discharging their contractual functions to PFAs, shall not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria.

    Furthermore, she said that the PFC shall obtain prior approval from the Commission before engaging a global Custodian for such allowable foreign investments.

    She said: “The PFAs, in discharging their contractual functions to Contributors under the new Contributory Scheme shall not contract out the investment or management of pension fund assets to third parties, except for open or close end or hybrid funds and specialist investment funds allowed by the regulation.

    “The PFAs shall maintain RSA ‘Active’ and ‘Retiree’ Funds, as provided to govern the investment of pension fund assets until effective implementation of the Multi-Fund Structure. In addition to the requirements of other guidelines issued by the Commission on corporate governance, ethics and business practices, each PFA shall establish an Investment Strategy Committee as well as a Risk Management Committee, in compliance with Section 66 of the Pension Reform Act, 2004 (“the Act” or “PRA 2004”).

    “The Investment Strategy Committee, in addition to other functions specified in the Act, shall formulate internal investment strategies to enable compliance with this Regulation, taking into cognizance the macro-economic environment as well as the investment objectives and risk profile of the PFA Funds.”

    The PenCom boss said the internal investment strategies shall be approved by the PFA at a board meeting at least once yearly or as frequently as changes occur in the macro-economic environment that may affect pension fund assets.

  • Foreign investment in FGN Bonds, T-Bills hits $11.6b

    Foreign investment in FGN Bonds, T-Bills hits $11.6b

    •Investors to closely watch CBN succession plans

    Foreign investors have a combined $11.6 billion stake in Federal Government of Nigeria (FGN) bonds and Treasury Bills (T-Bills), Razia Khan, Head African Research at Standard Chartered Bank, has said.

    In a report released at the weekend, she said the five-year term of Central Bank of Nigeria (CBN) Governor Sanusi Lamido will end in June 2014 and that the CBN boss was seen as the architect of reforms that stabilised Nigeria’s banking sector.

    Sanusi, she said, removed the minimum one-year holding period for offshore investors in FGN bonds, and a more credible anti-inflation policy with a commitment to foreign exchange stability.

    Khan said given Sanusi’s close identification with factors that contributed to Nigeria’s 2012 Government Bond Index-Emerging Markets (GBI-EM) index inclusion, investors will closely watch CBN succession plans.

    She said the 2014 budget was not presented in November 2013, the typical timeframe. This, according to her, was ostensibly because of disagreement over the benchmark oil price. “The contentious political backdrop raises the risk that no budget will be passed by end-March 2014 , the deadline for approving the budget. In addition, the still-ambitious oil output assumption (2.39mmbd versus 2.53mmbd in 2013) is likely to require further augmentation of budget revenue using Excess Crude Account (ECA) proceeds,” she said.

    According to her, with ECA savings thought to have declined to close to $3.3 billion, this raises upside risks to borrowing projections. also, given revenue constraints, the capital expenditure budget will be cut according to the Medium Term Expenditure Framework, with the share of recurrent expenditure set to increase to 74 per cent. While the framework foresees a reduction in spending to N4.5 trillion in 2014 from N5 trillion in 2013, the rise of a stronger political opposition is likely to result in pressure for increased spending.