The Nigerian government has introduced a new way for people to invest money called the Domestic US Dollar Bond. This is a special financial tool to get both local and international investors interested.
This bond will be available until August 30, 2024. So, there is plenty of time for people to join in and invest.
In this article, we will explain what the bond is, why it was created, and how you can invest in it.
What is the Domestic FGN US Dollar Bond?
The Domestic FGN US Dollar Bond is a type of loan that the Nigerian government is offering to people. It is managed by the Debt Management Office of Nigeria.
- This bond is part of a plan to make financial tools available that are based on foreign currency but can be accessed locally.
- It started with the Foreign Currency-Denominated Financial Instrument Local Issuance Programme in 2023.
Purpose of the Bond
The main reason for this bond is to raise money for important projects in Nigeria.
- The money from the bond will be used to pay for projects approved by the Nigerian President and recommended by the Finance Minister.
- These projects are very important for Nigeria’s growth and need to be approved by the National Assembly.
Issuer and Programme Size
The bond is issued by the Nigerian government. This is part of a larger plan to raise a total of $2 billion.
They will issue these bonds in different parts, with each part having its own rules.
Series 1 Details
The first part of this plan, called Series 1, aims to raise up to $500 million.
This bond will last for five years, meaning you will get your money back with interest five years after you invest. The interest rate is 9.75% per year, and it will be paid twice a year.
Who Can Invest?
A lot of different people can invest in this bond, including:
- Nigerians living in Nigeria.
- Nigerians living abroad who have foreign savings.
- Foreign and institutional investors.
This wide range of investors helps the government get enough funds and allows Nigerians, both at home and abroad, to help grow their country’s economy.
Subscription and Minimum Investment
To invest, you can sign up online or fill out forms at specific banks or financial institutions.
- You need at least $10,000 to start, and any extra money you want to invest has to be in multiples of $1,000.
- If you are using money from a bank account, it must have been there for at least 30 days before you invest.
You can’t invest with cash; it must be done through an electronic transfer.
Tax Benefits and Eligibility for Pension Funds
This bond has some tax benefits, which means you won’t have to pay certain taxes on the money you earn from it.
- It is exempt from Companies Income Tax, Personal Income Tax, and Capital Gains Tax.
- Pension funds can also invest in this bond, which is good for people managing retirement savings.
Trading and Liquidity
Once you have the bond, you can trade it on the secondary market, which includes exchanges like the Nigerian Exchange (NGX) and the FMDQ Securities Exchange.
- If you need your money back before the bond term ends, you can sell it.
- The Central Bank of Nigeria has also given this bond a special status, making it more secure and attractive for banks.
Principal and Interest Payments
The money you invested and the interest you earn will be paid back in US Dollars. This is different from other bonds that pay in Nigerian Naira.
You will start earning interest from the date you buy the bond, giving you a clear income path.
Oversubscription and Refunds
If more people want to invest than the bond can take, the Debt Management Office (DMO) may get approval to accept the extra money. If not, they will return the extra money to the investors.
- Refunds will go back to the accounts from which the money was sent, and bank fees may apply.
Compliance and Legal Framework
The bond follows all Nigerian laws, ensuring it is a safe and legal investment.
This is confirmed by the Attorney General and Minister of Justice of Nigeria.
Eurobonds vs. Domestic FGN US Dollar Bonds
Eurobonds need a lot of money to invest (usually $200,000 or more) and are listed on international markets.
The Domestic FGN US Dollar Bond lets you start investing with just $10,000 and is listed on Nigerian markets.
Finally,
The Domestic FGN US Dollar Bond is a great chance for anyone wanting to invest in Nigeria while earning in US Dollars.
- It offers good interest rates, tax benefits, and can be traded on local markets, making it a solid investment for many.
- As more people invest, it will help Nigeria’s economy grow.
- If you want to invest, make sure you have all needed documents ready and act quickly.
For more details and to apply, you can visit the DMO’s website or go to designated financial institutions.