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FGN Savings Bond - Investment - Nairaland

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FG's Savings Bond September Offer Closes 7th September / FGN Savings Bond / Federal Government To Sell N5,000 Savings Bond To Public (2) (3) (4)

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FGN Savings Bond by IHelp: 11:00pm On Mar 01, 2017
DEBT MANAGEMENT OFFICE NIGERIA PUBLIC NOTICE

Introduction Of FGN SAVINGS Bond

This is to bring to the notice of the public that the Debt Management Office (DMO), on behalf of the Federal Government of Nigeria (FGN), wishes to introduce a retail savings product that will be accessible to all income groups - the FGN Savings Bond.

A. Commencement Date
-Offer will be opened on Monday, March 13, 2017 and will run for 5 days.

B. Purpose
-To deepen the national savings culture.
-To provide opportunity to all citizens irrespective of income level to contribute to National Development.
-To enable all citizens participate in and benefit from the favourable returns available in the capital
market.
-To diversify funding sources for the government.

C. Benefits
-Interest income is paid quarterly directly into bond holder’s account.
-The Bond is acceptable as collateral for loans by banks and can be sold for cash in the secondary
market before maturity.
-Good for savings towards retirement, marriage, school fees, house projects, etc.
-Safety: backed by the full faith and credit of the Federal Government of Nigeria.

D. Features
-The product will be issued monthly in tenors of 2 and 3 years, with quarterly payment of interest to investors.
-The product will be offered to the investing public through Offer for Subscription at an interest rate to be announced by the DMO.
-The Offer for subscription will be open for 5 days from the date of announcement.
-Minimum subscription amount is N5,000.00 with additions in multiples of N1,000.00, subject to a maximum of N50,000,000.00.
-The Bond is backed by the full faith and credit of the Federal Government of Nigeria.

E. Subscription Mode
Investors are to subscribe through stockbroking firms trading on the floor of The Nigerian Stock
Exchange (NSE) and accredited by the DMO to act as Distribution Agents. (Please visit
www.dmo.gov.ng for the list of accredited Stockbroking Firms).

F. New Market Structure
In view of this addition to the FGN securities market, the new market structure for the FGN securities market will be as follows:
-FGN Saving Bonds - minimum subscription N5,000.00, maximum N50,000,000.00.
-Nigerian Treasury Bills - minimum subscription N50,001,000.00.
-FGN Bonds - minimum subscription N50,001,000.00.

Please note that the new market structure takes effect from March 6, 2017.

DEBT MANAGEMENT OFFICE
The Presidency
NDIC Building (First Floor)
Plot 447/448 Constitution Avenue
Central Business District
P.M.B. 532, Garki, Abuja
Website: http://www.dmo.gov.ng
Email: enquiries@dmo.gov.ng

3 Likes

Re: FGN Savings Bond by IHelp: 11:23pm On Mar 01, 2017
List of accredited Stockbroking Firms for FGN Savings bond

Re: FGN Savings Bond by IHelp: 7:57pm On Mar 06, 2017
Updated list of accredited Stockbroking firms for FGN Savings bond

Re: FGN Savings Bond by IHelp: 12:11am On Mar 09, 2017
Below is the link to download the subscription form to the FGN Savings Bond

https://www.dmo.gov.ng/fgn-bonds/savings-bond/1963-fgn-saving-bond-subcription-form/file
Re: FGN Savings Bond by Paramount01(m): 2:52am On Mar 09, 2017
Please, I am a novice about this thing can you please educate me
Re: FGN Savings Bond by Nobody: 3:21am On Mar 09, 2017
this is what we should be promoting, instead of all these useless Ponzi schemes.

8 Likes

Re: FGN Savings Bond by IHelp: 10:22am On Mar 09, 2017
Paramount01:
Please, I am a novice about this thing can you please educate me

Copied from a post by Timmi

Source:Nairametrics.com
The Debt Management Office of Nigeria launched a new retail investment program called the FGN Savings Bonds. In this article, Nairametrics will explain what the FGN Savings Bond means and how you can subscribe to it. We will also explain the difference between this product and other similar ones such as Treasury Bills. You can call this article the A-Z of the FGN Savings Bonds.

What is a Bond?

A bond is a confirmation from a borrower that it borrowed money (cash) from a lender at a given interest rate and repayable over a period. Bonds also include how payment of the principal and interest will be made. They also include the minimum amount that can be subscribed by a lender and in what multiples. Bonds are evidenced by an instrument typically issued by a company or country in exchange for cash.

What are FGN Bonds?

FGN Bond is a bond issued by the Nigerian government in exchange for cash at a given interest rates and a repayment period. It also states how payments of the principal and interest will be made. Nigeria has more than one FGN Bond, with each differentiated by their tenor (duration) and interest rates.

What is FGN Savings Bond?

An FGN Savings Bond is a bond issued by the Debt Management Office on behalf of the Nigerian Government. The bond is tailored and targeted at retail investors and includes a guaranteed interest payment and repayment of the principal. You can check this article for more on FGN Savings Bond.

Why is the government issuing a retail bond?

The government is issuing savings bonds targeted at ordinary Nigerians of all income groups, giving them the opportunity to earn an income through saving and investing. The bond is also expected to help promote the savings culture of Nigerians. Most Nigerians are thought not to save in banks because of very low-interest rates.

What are the benefits ?

The bond earns you an interest that will be paid quarterly directly into your bank account.
The bond is safe and is backed by the full faith and credit of the FG. Government Bonds hardly default, so you are nearly 100% sure that you will get your money back in full along with the interest.
You need not be rich to invest as anyone with as little as N5,000 can invest in the bond.
FGN Savings Bond is a good way to save towards your marriage, an occasion, school, project, retirement etc.
You can also use the Bond as a collateral to get a loan from a bank.
What are the risk ?

FGN Bonds are often said to be risk free because the Federal Government hardly defaults on debt repayments especially if it is a Naira denominated debt. However, being a bond there are a few risks, should you decide to sell before maturity. Just like a stock, you can invest N1 million in a bond and get only N900k in principal. We’ll explain this later. You also face the risk of losing the value of your investment to inflation. If the interest rate on the FGN Savings Bond is lower than inflation rate, then your returns are lower than in real terms. In a high inflationary environment like Nigeria, investing in bonds can lead to a loss of value if the rates are lower than inflation.

How much can I invest?

Retail investors looking to invest in the FGN Savings Bond only need a minimum of N5,000 to invest. Subsequent investment over N5,000 will be in multiples of N1,000. Meaning that you cannot invest N5,500 or N12,700. It’s either N6,000 or N13,000 or N30,000. The maximum amount a single retail investor can invest in the FGN Bond is N50 million.

Where can I buy it from?

You can buy it from any of the approved registered stockbrokers. Just ask your stockbroker if they are authorised to sell. It’s that simple.

What is the tenor of the loans and what is the interest rate?

The bonds have a tenor of 2 and 3 years respectively. Meaning that you can either invest in an FGN Savings Bond with a duration of 2 years or one with a duration of 3 years. The interest rates are determined by the Debt Management Office. They decide what rates they are willing to pay.

How will the interest and principal be paid?

The interest will be paid quarterly into your bank accounts while the principal will be paid at maturity (the end of the tenor, 2 or 3 years) depending on what duration you subscribed to.

When did the government, start selling FGN Savings Bonds?

The Federal Government through the Debt Management Office will start selling FGN Bonds on the 13th of March 2017.

Will it be issued monthly?

Yes, the FGN Savings Bond will be issued monthly

What if I decide to sell before maturity?

You need not hold on to the bond until maturity. If you need cash anytime during the duration of the bond, you can sell your bond in exchange for cash. However, the portion of the interest that you are not entitled to earn because you have sold will not accrue to you any longer. For example, if you buy March 13 and sell August 13 2017 because you cannot wait till March 2019 (after two years) to get your principal, you will only be entitled to the interest earned between March 13 and August 13 2017. However, note that should you wish to sell before maturity, you might pay a transaction fee. Also, because it is a bond, the price you get might be more or higher depending on the market value of the bond.

What is a market value?

A bond has certain characteristics similar to a stock. Being an instrument, bond prices can often be higher or lower than their face value. A face value of a Nigerian Bond is typically N1,000. Let’s assume you bought FGN Savings bond at N1 million and at an interest rate of 13% per annum. It means that for every N1,000 of your investment, you will earn N130 (also known as the coupon rate). So, if you decide to hold your N1 million to maturity, you will earn N130k annually.

In the secondary market, bond prices behave like stock and react to the forces of demand and supply. Supposing lending rates in the country suddenly rise to 16%. It means that the bond you bought that earns you 13% is no longer attractive as the FG will only continue to pay the N130 for every N1,000 in Face value.

To therefore earn a return of 16% at the coupon of N130, the bond will need to sell for a Face Value of N814.11. So, should you wish to sell your bond when the price is going for N814.11, either because you are in need of cash or just as part of your trading activities, you will only get N814.1k (still subject to charges) and lose N185.8. This explains the risks we talked about earlier.

Can I buy even more within a tenor?

Yes, you can subscribe for more provided it is in multiples of N1,000 and not exceeding a total cumulative amount of N50 million.

What is the difference between FGN Savings Bonds and Treasury Bills?

Unlike Treasury Bills, FGN Savings Bonds has a duration of between 2-3 years. Treasury Bills are not more than 1 year with shorter tenors of 91 days and 182 days.
Treasury Bills rates are determined by the forces of demand and supply. The DMO says, the FGN Saving Bonds rates will be determined by them
Treasury Bills interest rates are paid upfront. For example, if you invest in Treasury Bills today, they will pay you all your interest today. For FGN Savings Bonds, it will be at the end of the first quarter.
Unlike FGN Savings Bonds, Treasury Bills are not sold in the stock market
The DMO has also now said, Treasury Bills can no longer be sold to retail investors. You will need at least N50,000,1000 to invest in Treasury Bills.

Copied from a post by Timmi

12 Likes

Re: FGN Savings Bond by X21: 12:36pm On Mar 09, 2017
Have they announced the interest rate
Re: FGN Savings Bond by IHelp: 9:21pm On Mar 09, 2017
X21:
Have they announced the interest rate

Not yet.
Re: FGN Savings Bond by IHelp: 9:51am On Mar 13, 2017
The rate is finally out

Re: FGN Savings Bond by IHelp: 4:42pm On Mar 23, 2017
March allotment result

Re: FGN Savings Bond by IHelp: 4:43pm On Mar 23, 2017
April offer

Re: FGN Savings Bond by IHelp: 4:45pm On Mar 23, 2017
Updated list of accredited Stockbroking Firms for the FGN Savings Bond

Re: FGN Savings Bond by Nobody: 9:50pm On Mar 23, 2017
IHelp:
Updated list of accredited Stockbroking Firms for the FGN Savings Bond
Re: FGN Savings Bond by IHelp: 8:53pm On Mar 29, 2017
The Debt Management Office (DMO) on Wednesday listed series 1 of the Federal Government of Nigeria (FGN) Savings Bond worth N2.067 billion at N1,000 on the Nigerian Stock Exchange (NSE).

http://thenationonlineng.net/dmo-lists-fgn-savings-bond-nse-service-budget-deficit/
Re: FGN Savings Bond by IHelp: 8:43pm On Mar 31, 2017
Below is the link to the new subscription form for the FGN Savings Bond

https://www.dmo.gov.ng/fgn-bonds/savings-bond/1963-fgn-saving-bond-subcription-form/file

Re: FGN Savings Bond by IHelp: 10:38am On Apr 03, 2017
April offer rate

Re: FGN Savings Bond by IHelp: 7:19am On May 08, 2017
Re: FGN Savings Bond by IHelp: 7:22am On May 08, 2017
May offer rate.
The rate is going up
2years- 13.189
3years- 14.189

Re: FGN Savings Bond by IHelp: 7:03am On Jun 05, 2017
June offer rate
The rate remains same as that of May
2years - 13.189% per annum
3years - 14.189% per annum

1 Like 1 Share

Re: FGN Savings Bond by nigeriafarmer: 12:03pm On Jun 05, 2017
IHelp:
List of accredited Stockbroking Firms for FGN Savings bond
Let say u invent 20,000 for 2 years in the bond how much will be my money at the end of the two year?
Re: FGN Savings Bond by IHelp: 11:18pm On Jun 05, 2017
nigeriafarmer:
Let say u invent 20,000 for 2 years in the bond how much will be my money at the end of the two year?

The interest rate for the 2years bond is 13.189 per annum.
For 1 year your interest on N20,000 will be (13.189/100)×20,000 = 2,637.8
For 2years interest will be 2,637.8×2 = 5,275.6

Interest is paid every quarter. Which means you will get 5,275.6/8 = 659.45 (Edited- every 3months)
Re: FGN Savings Bond by nigeriafarmer: 9:59am On Jun 06, 2017
IHelp:


The interest rate for the 2years bond is 13.189 per annum.
For 1 year your interest on N20,000 will be (13.189/100)×20,000 = 2,637.8
For 2years interest will be 2,637.8×2 = 5,275.6

Interest is paid every quarter. Which means you will get 5,275.6/8 = 659.45 every 4months
ok thanks

1 Like

Re: FGN Savings Bond by IHelp: 1:18pm On Jul 03, 2017
July offer rate
The rate increased by 0.197
2years - 13.386% per annum
3years - 14.386% per annum

https://www.dmo.gov.ng/fgn-bonds/savings-bond/2102-july-2017-fgn-savings-bond-offer-for-subscription

Re: FGN Savings Bond by IHelp: 9:49pm On Jul 12, 2017
Result for July 2017 and date for August offer

Re: FGN Savings Bond by IHelp: 1:53pm On Aug 07, 2017
August offer rate

The rate increased by 0.149

2years - 13.535% per annum
3years - 14.535% per annum

https://www.dmo.gov.ng/fgn-bonds/savings-bond/2138-august-2017-fgn-savings-bond-offer-for-subscription

Re: FGN Savings Bond by IHelp: 8:12am On Sep 11, 2017
September offer rate

The rate increased by 0.282

2years - 13.817% per annum
3years - 14.817% per annum

1 Like 1 Share

Re: FGN Savings Bond by IHelp: 7:50am On Oct 09, 2017
October offer rate

The rate reduced by 1.758

2years - 12.059% per annum
3years - 13.059% per annum

https://dmo.gov.ng/fgn-bonds/savings-bond/2216-october-2017-fgn-savings-bond-offer-for-subscription

Re: FGN Savings Bond by IHelp: 6:53am On Nov 06, 2017
November offer rate

The rate increased by 0.032

2years - 12.091% per annum
3years - 13.091% per annum

http://dmo.gov.ng/index.php/fgn-bonds/savings-bond/2238-november-2017-fgn-savings-bond-offer-for-subscription

Re: FGN Savings Bond by Dollabiz: 10:05am On Nov 06, 2017
Good
Re: FGN Savings Bond by AcquireCofOLand(m): 1:10pm On Nov 06, 2017
Hmmm.... A good analysis is required of someone just coming in with all the rates reducing recently.
Re: FGN Savings Bond by moemindz: 3:10pm On Nov 10, 2017
Please advice.

My stockbroker submitted my bid form without a cscs account number, because it haseems not been generated yet.

Also, am I supposed to get a bond certificate or just monitor my cscs account (according to them would soon be open) as they told me.

1 Like

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