Angelstartups:
Hello @kennyzboy,

Federal Government Bonds (also referred to as FGN Bonds) are long term fixed income investment vehicle (option) that are classified as almost risk-free. Because the risk is close to zero, the returns are also very predictable and fixed.

The returns on FGN bonds are called COUPONS and coupons are paid twice in a year.

The Government raise bonds through the DMO (Debt Management Office) who deal directly with Primary Dealers (agents) who on-wards sell to Other registered dealers (secondary) who then sell to retail/ institutional investors. These Primary dealers are limited in number because DMO cannot be opened to every retail or institutional investor/ trader and therefore the DMO has guidelines that these Primary Dealers must abide by before they can be registered.

The Government raise bonds to finance capital projects for the benefit of its citizens and few other reasons (example: to mop up excess liquidity within the system to curb inflation).

So how does it work really? Let me use the example you have sighted here:

If Kennyzboy invests N10m in a 5 year FGN bond at a coupon rate of 15%, it means:
Coupon=15/100*10,000,000=N1,500,000
Therefore, every 6 months after, kennyzboy will receive N750,000 in his bank account till the end of 5 years when Kennyzboy will receive N750,000 and your Principal N10,000,000. (note your bank will take a small commission for the transaction).

To put it in context, let's assume Kennyzboy invest N10m in 5-year FGN bond at 15% in June 2015 (to mature in June 2020), Kennyzboy will receive coupons as follows:
N750,000 in December 2015, N750,000 in June 2016
N750,000 in December 2016, N750,000 in June 2017
N750,000 in December 2017, N750,000 in June 2018
N750,000 in December 2018, N750,000 in June 2019
N750,000 in December 2019, N750,000 in June 2020 plus N10million Principal payment.

Hope this gives you some idea about how Bonds work.

Cheers.

kennyzboy:
More thanks to @Angelstartups for giving us an indept explanation and education on federal government bonds investing procedures and also for providing materials and links to help us further understand how to start and participate in it.

unite4real:

VERY IMPRESSED WITH THE EXPLANATIONS.
BTW, WHERE ARE THE MATERIALS AND LINKS YOU COMMENTED ABOUT

ernie4life:
investment one financial services limited (formerly gtb asstet management) deal on FG bonds, log on to www.investment-one.com for more info, I work there so am sure.

how ever tbills are bound to perform more than bonds

Angelstartups:
Hello @kennyzboy,

Federal Government Bonds (also referred to as FGN Bonds) are long term fixed income investment vehicle (option) that are classified as almost risk-free. Because the risk is close to zero, the returns are also very predictable and fixed.

The returns on FGN bonds are called COUPONS and coupons are paid twice in a year.

The Government raise bonds through the DMO (Debt Management Office) who deal directly with Primary Dealers (agents) who on-wards sell to Other registered dealers (secondary) who then sell to retail/ institutional investors. These Primary dealers are limited in number because DMO cannot be opened to every retail or institutional investor/ trader and therefore the DMO has guidelines that these Primary Dealers must abide by before they can be registered.

The Government raise bonds to finance capital projects for the benefit of its citizens and few other reasons (example: to mop up excess liquidity within the system to curb inflation).

So how does it work really? Let me use the example you have sighted here:

If Kennyzboy invests N10m in a 5 year FGN bond at a coupon rate of 15%, it means:
Coupon=15/100*10,000,000=N1,500,000
Therefore, every 6 months after, kennyzboy will receive N750,000 in his bank account till the end of 5 years when Kennyzboy will receive N750,000 and your Principal N10,000,000. (note your bank will take a small commission for the transaction).

To put it in context, let's assume Kennyzboy invest N10m in 5-year FGN bond at 15% in June 2015 (to mature in June 2020), Kennyzboy will receive coupons as follows:
N750,000 in December 2015, N750,000 in June 2016
N750,000 in December 2016, N750,000 in June 2017
N750,000 in December 2017, N750,000 in June 2018
N750,000 in December 2018, N750,000 in June 2019
N750,000 in December 2019, N750,000 in June 2020 plus N10million Principal payment.

Hope this gives you some idea about how Bonds work.

Cheers.

tonylistic:
pls how can I buy share now am interested in it .how can I meet a stockbroker

L0nestar:
I just finished sending a complaint to GTB customer care iro FGN Bond maturing 23rd April.2015 the principal of which has
not been paid when I stumbled on this post.
At maturity, the investor will fill a form called Repayment Form specifying the bank and account number into which the CBN will repay the principal into.

Another unethical move. You are not supposed to fill any form whenever your Bonds or Tbills mature. They one you filled when you invested should state credit my acct with my money at maturity shikena. The bank is using ur money for their biz telling you to come and fill a form for them to credit ur money to ur acct!!!! Haba Naija Banks. Pls if any one gets this type of service. Kindly report the bank or financial institution to CBN. They only time you have to write a letter of redemption or fill any form is when u are liquidating the investment before maturity and when you request to start the investment.

But note again. There might be technical issues for them to credit your acct with these proceeds or their waiting for the trade to settle. But these are local securities hence settlement shouldn't be more dan T + 2

pipz:

Very good explanation but kennyboy will only receive 10 million principal only if he bought the Bond at par ( face value) which is always not the case. Kenny will only get 10 m if he invested in the primary auction I.e a new issue which will sell at par. But if Kenny buys at the secondary market which is the most available to retail clients Kenny won't get his full principal back. Image if Kenny had bought the FGN Bond 29/06/2019 16.00% selling at 108 as at Friday. At maturity Kenny boy will be paid at par. Ie 100 Naira per unit. Note Kenny that you had bought a unit for 108. So do they math.

author=NairaQuest post=34474888]

wuwu2:
Anybody here has the auction summary for fgn bonds today?

ernie4life:


go to Tbills thread, someone posted it there

wuwu2:
tnx man. Finally got it but this thread should b more alive. No mid to long term investors in Nigeria?

wuwu2:
Yea. Bro. Please do
We should get this site going
Learn a few things