Connect with us

Business

15 Things to Know About FG’s Domestic Dollar Bond

Published

on

15 Things to Know About FG’s Domestic Dollar Bond
Spread The News

 

 

On August 19, the federal government unveiled a $500 million domestic dollar bond for public subscription, marking a significant development in the nation’s financial landscape. Here are 15 key details investors should know about this new financial instrument:

Purpose of the Bond: The funds raised through this bond will support critical sectors of the economy, pending approval by President Bola Tinubu, the finance minister, and the national assembly.

Investor Eligibility: The bond is open to Nigerian residents, Nigerians with savings abroad, the Nigerian diaspora, as well as foreign and institutional investors, including pension fund administrators.

Payment Method: All payments for the bond must be made through electronic transfers into designated accounts. Cash deposits are not accepted.

Domiciliary Account Requirement: Funds for subscription must have been in a domiciliary account for at least 30 days prior to the application date. For this issue, the funds should have been in the account by July 20, 2024.

READ ALSO: FG re-opens three bonds of 190m units for subscription at N1,000 each

Application Process: Interested investors can obtain an application form through the DMO website, issuing houses, financial advisers, or receiving banks.

Bond Issuance Details: While the target programme size is $2 billion, the initial tranche of $500 million is being offered. An additional $1.5 billion may be issued in later tranches.

Repayment Terms: Both the principal and interest will be repaid in dollars. Repayment will not be made in naira.

Interest Payments: Interest will be paid semi-annually, every six months, while the principal will be repaid at the end of the bond’s five-year tenor.

Accrual of Interest: Interest on the bond begins to accrue from the issue/settlement date, which follows the closure of the offer.

Identification Requirements: Investors need to provide a Bank Verification Number (BVN) and a National Identification Number (NIN) for subscription. Nigerians in the diaspora can apply for these if they do not already possess them.

Liquidity Status: The Central Bank of Nigeria (CBN) has granted the bond a liquid asset status, which means it can be easily converted to cash.

Over-subscription Handling: Necessary approvals will be sought to accommodate over-subscriptions. If the over-subscription is not approved, excess funds will be refunded to the subscribers.

Tax Exemptions: Income earned from the domestic dollar bond is exempt from companies’ income tax, personal income tax, and capital gains tax.

Differences from Naira Bonds: Unlike traditional naira-denominated bonds, interest and principal payments for this domestic dollar bond are made in dollars.

Comparison with Eurobonds: Eurobonds, typically issued in larger lot sizes (minimum $200,000) and listed on Euroclear, differ from domestic dollar bonds, which have a minimum subscription of $10,000 and are listed on the Nigerian Exchange (NGX) Limited and FMDQ Securities Exchange.

The domestic dollar bond represents a notable opportunity for investors seeking to diversify their portfolios with a dollar-denominated asset while contributing to Nigeria’s economic growth.

 

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published.

Trending