DMO opens September bonds offer with 18.2% interest
By Uche Usim
The Federal Government of Nigeria, through the Debt Management Office (DMO), has announced the opening of its September 2024 Federal Government of Nigeria (FGN) savings bonds offer, with interest rates reaching remarkable levels in response to the country’s economic landscape.
The subscription period for these bonds runs from September 2nd to September 6th, 2024. Investors can opt for either the two-year savings bond, maturing on September 11, 2026, with an interest rate of 17.202%, or the three-year bond, maturing on September 11, 2027, offered at a highly competitive rate of 18.202%. Priced at N1,000 per unit, these bonds require a minimum investment of N5,000, with additional investments possible in multiples of N1,000 up to N50,000,000. Quarterly interest payments ensure a regular income for bondholders, enhancing the appeal of these securities.
The substantial increase in interest rates reflects the Central Bank of Nigeria’s (CBN) vigorous measures to control inflation and stabilize the foreign exchange market. Since early 2024, the CBN has raised interest rates by 800 basis points across four Monetary Policy Committee (MPC) meetings, aiming to attract Foreign Portfolio Investments (FPIs) and support the broader economy. This aggressive monetary policy has driven up the rates on FGN savings bonds, making them an increasingly attractive option for investors seeking higher returns.
Compared to the same period last year, the interest rates on FGN savings bonds have surged significantly. In September 2023, these bonds were offered at a rate of 12.031%, marking a steep rise of 6.17 percentage points in just one year. This hike underscores the current high-interest environment, offering savers an opportunity to earn more on their investments in a secure and government-backed vehicle.
The strong demand for government bonds was evident in the August 2024 FGN bond auction, where the Federal Government raised N374.751 billion, far exceeding expectations. The auction featured three bonds with tenors of 5, 7, and 9 years, with the 9-year bond drawing particularly strong interest. Investors poured in N375.083 billion in subscriptions for the 9-year bond, a massive oversubscription compared to the N50 billion offered. Ultimately, N314.213 billion was allotted at a marginal rate of 21.50%, showcasing the continued appetite for longer-term securities in Nigeria’s evolving financial landscape.
As Nigeria continues to address economic challenges, these bond offerings play a crucial role in funding national projects and providing investors with a safe and profitable investment option. The September 2024 FGN savings bonds, with their elevated interest rates, present an enticing opportunity for Nigerians to secure strong returns while contributing to the nation’s development.
