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Federal Government Plans to Borrow N2.5 Trillion Through Bond Auction in February

Federal Government Plans to Borrow N2.5 Trillion Through Bond Auction in February

The Federal Government intends to borrow N2.5 trillion through its second bond auction of 2024, as stated in a recent circular from the Debt Management Office (DMO).

The auction is scheduled for February 19, 2024, with the settlement date set for February 21, 2024.

Unlike previous auctions where smaller amounts were offered, this auction marks the first time the government is borrowing over a trillion through a single bond.

Details of the February Bond Offer:

  • N1,250,000,000,000.00 – FGN FEB 2031 (7-Year Bond)
  • N1,250,000,000,000.00 – FGN FEB 2034 (10-Year Bond)

Both bonds are newly created and are offered at a unit price of N1,000. The minimum subscription requirement is N50,001,000, with subsequent increments in multiples of N1,000. Interest payments are made semi-annually.

About FGN Bonds:
FGN bonds meet investment criteria outlined in the Trustee Investment Act and qualify as Government securities under tax laws, making them tax-exempt for investors like Pension Funds.

After auction, the bonds are listed on both the Nigerian Exchange Limited and FMDQ OTC Securities Exchange for trading in the secondary markets.

Key Points:

  • In 2023, FGN bond auctions raised about N5.49 trillion, helping finance the budget deficit.
  • January’s bond auction raised approximately N418.197 billion.
  • With a budget deficit of N9.18 trillion for 2024, the government continues its borrowing trend to meet financial needs.

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