FG announces subscription window for January savings bonds

• The Federal Government has announced the subscription window for its January savings bonds
• The window runs from January 13 to 17 for both individual and institutional investors
• The savings bonds offer higher yields following the rising interest rate

The Federal Government of Nigeria has announced the subscription window for the Federal Government Savings Bonds (FGN Savings Bonds) for January 2025.

According to the Debt Management Office (DMO), individual and institutional investors are invited to participate from January 13 to January 17, 2025.

The January 2025 bond offering features a two-year savings bond maturing on January 22, 2027, with an interest rate of 17.235 per cent, and a three-year bond maturing on January 22, 2028, offering 18.235 per cent.  

The DMO said each bond unit is priced at N1,000 with a minimum subscription requirement of N5,000, and that investors can increase their investment in multiples of N1,000, up to a maximum limit of N50 million. 

Successful subscriptions will be settled on January 22, 2025, with the first quarterly coupon payment scheduled for April 22, 2025, followed by payments on July 22, October 22, and January 22 annually.

FG offered two bonds in December 2024

It will be recalled that the Federal Government offered two bonds in an auction held on December 16, 2024, where it raised a total of N211.144 billion.

It offered the 19.30 per cent FGN APR 2029 and the 18.50 per cent FGN FEB 2031, both of which settled on December 18, 2024, with maturity dates of April 17, 2029, and February 21, 2031, respectively.

The five-year 18.50 per cent bond attracted a total subscription of N67.457 billion from 44 bids, with 30 bids successfully awarded.

A total of N51.857 billion was allotted at a marginal rate of 21.14 per cent, with bids ranging from 19.30 per cent to 22.14 per cent.

The seven-year 18.50 per cent bond received a subscription of N211.363 billion, with 116 bids submitted out of which 68 were successful.

N159.287 billion was allotted at a rate of 22.00 per cent. These bids ranged from 19.00 per cent to 24.00 per cent.

Higher bond yields driven by rising interest rate

The January 2025 three-year savings bonds maturing in January 2028 offers an interest rate of 18.235 per cent, a 6.20 per cent increase from the 12.033 per cent rate recorded in January 2024.

The adjustment in the rates reflects the impact of the persistent tightening monetary stance of the Central Bank of Nigeria (CBN) in 2024.

The CBN increased the rate from 18.75 per cent in January 2024 to 27.50 per cent in November, an 8.75 per cent increase during the year, which has also increased the appeal of longer-term securities.

The increased yields from these securities are an attraction for foreign portfolio investors seeking competitive returns on their investments.

The November 2024 CBN rate hike was the sixth in the year, aimed at addressing Nigeria’s surging inflation, which soared many times in 2024 and reached a new 28-year high of 34.60 per cent in November 2024.

FG raises $2.2 billion in Eurobond to fund 2024 budget deficit

Meanwhile, TheRadar earlier reported that the Federal Government raised $2.2 billion in Eurobonds to fund the fiscal deficit in the 2024 budget.

According to a statement by the Debt Management Office (DMO), the bonds will mature in the international capital markets in 2031 (6.5-year) and 2034 (10-year).