₦airaland Forum

uuspace:
Hi guys Stockmarketnigeria.com is back. For those who love SMN

thanks

Lalaska:
If this is true, then na dem go invest for their savings bond

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.

Dear House,
My treasury bill is maturing on the 16th of March, 2017. Please how will the payment be made by CBN. Will it be credited directly into my account?

I will really appreciate your response.

Regards.

Austinekg:
Dear House,
My treasury bill is maturing on the 16th of March, 2017. Please how will the payment be made by CBN. Will it be credited directly into my account?

I will really appreciate your response.

Regards.

Yesss. ...the alert will wake you up or reminds you when you have forgotten it is 16th

Timmi open a room for fg bond and let us know . so one tenor is 2 or 3 years not 3 or 6months ? example if i invest #100,000 in fgn bonds what will be my profit after 2years at 13%? if the bonds are down hope my capital will not go down? .

e com be say na the time when I decide to join NTB naim DMO com carry their wahala com.

wetin retail investors do una naa.....

how I go take participate for NTB anyhow

this FGN savings bond too long and its calculations be like mmm......

The wahala go too much jaree...

#bringbackNTB4all

Please I need someone that will explain these bond for me very well

Apart from the detailed explanation (including examples) above?

Paramount01:
Please I need someone that will explain these bond for me very well

Paramount01:
Please I need someone that will explain these bond for me very well

it is very paramount that you go through the details above

This is the FGN Saving Bond subscription form from DMO website.

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

[quote author=ukay2 post=54343590][/quote]Good day can you send me details of how to subscribe for Treasury bill to my mail. ahwuyen@yahoo.com
thanks will be expecting it.

feelamong:
Pls can you inbox me on how to subscribe for the treasury bill to my mail: ahwuyen@yahoo.com

Lalaska:
true. Actuallly doing 17.4% this morning against the 17.2% from this week's NTB 182 day result. You can access your MMF from 30 days. This implies that youre getting at least 17.4 for 30 days compared to around 14% for 30 days on NTB. So Mutual Funds - MMF is the way forward. The only downside is that you don't take your interest upfront.

if you dont take your money upfront, i might be wrong but dont you think the MMF of 90 days at 17% is performing lower than an NTB of 17.5% for 90 days because the true yield for that NTB is around 20% plus because of the upfront interest


Knowledgeable people am i wrong or right, asking because i need to make a decision about something similar to the MMF

nairaxchan:
if you dont take your money upfront, i might be wrong but dont you think the MMF of 90 days at 17% is performing lower than an NTB of 17.5% for 90 days because the true yield for that NTB is around 20% plus because of the upfront interest


Knowledgeable people am i wrong or right, asking because i need to make a decision about something similar to the MMF

at a discount rate of 14%, true yield on a 91-day paper is only 14.5%. true yield only becomes significant when your tenor is long. compare 14.5% to 17.5%, and you could be looking at a difference of 30,000 on a 1m investment per annum. plus you don't even have to invest for up to 91 days to get the 17.5%. For the issue of the upfront interest, except for the cashflow advantage, comparing the MMF yield to the NTB's true yield already compensates for that. plus watching your NAV grow by the day on an MMF can be exciting.

awesomeJ:
I actually moved from NTB to MMF last month basically for cash flow reasons, I guess now, it's being a great decision, considering that I get upwards of 17% regardless of investment tenor. I see mutual funds sizes growing significantly over the next quarter, as it won't be long before retail investors who pulled out to NTB last year return.

please, which money market fund investor can you recommend?

sherif4owo:
please, which money market fund investor can you recommend?

Please can you give me a guideline on how to invest on MMF.

Regards.

Go to either stanbic, arm or first bank and tell them you want to invest in money market. They will give you form. You can compare and choose the best rate.

Austinekg:
Please can you give me a guideline on how to invest on MMF.

Regards.

Austinekg:
Please can you give me a guideline on how to invest on MMF. Regards.

asking the same question

Please are we bidding through banks for this 15th March 2017 NTB. ...how effective is this new DMO circular on NTB? ?

Thanks for kind replies. ....

Great thread

ukay2:
Please are we bidding through banks for this 15th March 2017 NTB. ...how effective is this new DMO circular on NTB? ?

Thanks for kind replies. ....

No specification of rate
you go with bank rate
bank rates will keep going lower as time progresses
as they will take advantage of the new rule

X21:
No specification of rate
you go with bank rate
bank rates will keep going lower as time progresses
as they will take advantage of the new rule

Na wa ooooo. Hope stanbic ibtc bank no go mess up

Thanks

sherif4owo:
please, which money market fund investor can you recommend?

I use StanbicIBTC Asset Management Limited. Rates are attractive, redemptions are effected within 24 hours.

Can anyone tell me the bidding rate of last auction?

just2endowed:
Can anyone tell me the bidding rate of last auction?

You can't bid unless you have ₦50 million at least.

"The DMO has also now said, Treasury Bills can no longer be sold to retail investors. You will need at least ₦50,000,000 to invest in Treasury Bills."

Anyways, this was the last bidding rate:
TREASURY BILLS UPDATE, 1/03/2017
91 DAYS ---13.65%
182 DAYS --- 17.20%
364 DAYS -----18.4965%

rookidmart:
You can't bid unless you have ₦50 million at least.

"The DMO has also now said, Treasury Bills can no longer be sold to retail investors. You will need at least ₦50,000,000 to invest in Treasury Bills."

Anyways, this was the last bidding rate:
TREASURY BILLS UPDATE, 1/03/2017
91 DAYS ---13.65%
182 DAYS --- 17.20%
364 DAYS -----18.4965%

I think there's need for proper interpretation of DMO's publication as regards this 50M T-Bill minimum. I know some that has already been debited for the coming T-Bill bid.

Between federal government bonds ND treasure bill which one is adviceable to invest in

for those wanting to branch out to money market funds. from first bank group, I bring you a glimpse of the rate to expect. formerly I was scared of the shrinking fund size but its good to see fund size has bulked up from 24bn as at DEC to 28bn presently.

Ur profit is given every quarter, j.e after 3 months, however u can request for ur capital anytime after one month compulsory stay with them.

well as u can see from the chart, it tells u what they invest majorly in. over 70% of the 28billion naira of investors funds goes to the t.bills section.

the yields changes every month, so from the pic u can see its presently at 15%, next month could be higher or lower. all which will impact your profit at the end of each quarter

for those who would want to branch out coz of the new tbills rule, goodluck

Hello house,
I have decided that rather than save money in the bank, I should invest in a money market fund. Could anyone please provide information on what MMF can be purchased, monitored and easily redeemed online without needing to walk into the premises of any financial institution?

fantasy7800:
Hello house,
I have decided that rather than save money in the bank, I should invest in a money market fund. Could anyone please provide information on what MMF can be purchased, monitored and easily redeemed online without needing to walk into the premises of any financial institution?

ARM & Stanbic, that I know of.

FBNquest