DMO introduce savings bonds for retail investors
The Federal government of Nigeria through its Debt Management Office on Wednesday announced its plan to target retail investors with a new savings bond that will go on sale this month.
The debt office said the bonds will be offered in Two- and three-year maturities, with interest paid quarterly. The interest rate has yet to be announced, but the debt office paid 16.5 percent on a five-year bond sold to institutional investors last month. According to DMO, “The bonds will be good for savings towards retirement, marriage, school fees and house projects.”
The nation’s debt office explained that savings accounts at Nigeria’s commercial banks pay up to 5 percent in interest, but the country’s inflation is running at more than 18 percent annually. The bond offer will open on March 13 and end after five days, the debt office said. New issues will be sold every month. The minimum subscription will be 5,000 naira ($16) and the maximum 50 million naira. Nigeria’s government depends on local borrowing to fund more than half its budget deficit, which is expected to reach 2.36 trillion naira this year.
It issued a $1 billion Eurobond last month and is now seeking approval from parliament for an additional $500 million Eurobond. Last week, it said it would offer a 20 billion-naira “green bond” in April. The government also plans to sell a $300 million diaspora bond abroad this year and its first sovereign sukuk in the local market.
Meanwhile, the 8 fold over- subscription of the recent Eurobond orders in excess of US$7.8 billion compared to a pre- insurance target of US$1bn is a strong indication that international investment community are confident in Nigeria economic reform agenda, the federal government has said. The federal government position was contained in a bulletin of the Aso Villa, “Government at Work,” released, in Abuja, Tuesday.
According to the report, the nation’s economy is already on its road to recovery as showed in the marginal non-oil sector growth rate of 0.03 percent in 2016 Q3 (after two quarters of consecutive negative growth. The federal government attributed the marginal growth to the continued good performance in agriculture and solid minerals, the two sectors that have received greater attention from the Buhari administration
It further explained that agriculture grew by 4.54 per cent in the quarter under consideration, with growth in crop production recording nearly 5 per cent, its highest since the first quarter of 2014. Growth in the solid mineral sector was said to have averaged about 7percent.
