Finance Markets

DMO: Nigerian government’s securities ‘profitable and risk-free’

Patience Oniha, director-general, DMO, said this in an interview with the News Agency of Nigeria (NAN) on Tuesday in Abuja.

The Debt Management Office (DMO) says Nigerians can invest in the various federal government securities, assuring that they are profitable and risk-free.

Patience Oniha, director-general, DMO, said this in an interview with newsmen on Tuesday in Abuja.

Oniha said the various federal government of Nigeria (FGN) securities are ways for Nigerians to tap into the investment opportunities the country has to offer, adding that the funds raised will also help finance important projects.

According to her, the bonds issued by the federal government through the agency, make periodic interest payments to the investors, while the principal is paid at the end of each tenure.

“The federal government has various investment platforms like the FGN bond, FGN savings bond, treasury bills, the green bond, the sovereign sukuk, and eurobond,” Oniha said.

“One function of these FGN securities is to raise capital to finance deficits in the budget, and also to raise funds to execute critical infrastructure projects.

“They are backed by full faith and credit of the federal government of Nigeria, and are default risk-free.”

Oniha said the FGN securities have contributed to the development of the domestic capital market and has served as a benchmark for other private institutions to issue their own securities.

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She said they enhance the savings and investment opportunities of the populace, thereby promoting financial inclusion.

“They also attract foreign investors into the domestic financial market, to refinance maturing domestic debt and to diversify sources of funding for the federal government,” Oniha said.

“You can use them as collateral to obtain loans from banks and other financial institutions, and they help in diversification of investment portfolio.

“They are also a source of steady income, as investors’ interests are paid every six months or every three months, and they are tradable on the stock exchange.”

Further speaking on the diverse government offers, the director-general said the eurobond is issued in dollars, and designed to provide domestic exposure to foreign investment; while the sovereign Sukuk is a Sharia-compliant security for the pool of assets.

According to her, the FGN bond, the flagship and longest of the existing securities, offers medium-to-long-term investments, “from five years to seven years, to 10 years, 20 years and 30 years”.

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Oniha said the product is offered every month, with a minimum subscription of N50 million.

“The second product, the FGN savings bond is designed with retail investors in mind. It is issued every month, with a minimum subscription of N5,000 and in multiples of N1000, subject to a maximum of N50 million,” Oniha said.

“When you invest in Eurobond you are owning a dollar-denominated assets, and that adds foreign exchange exposure to your portfolio, while also boosting the nation’s external reserves.

“The Sukuk ensures that every financial activity is backed by real economic activity, and there are specific infrastructural projects linked to the Sukuk investment.”

Oniha added that the green bond is a fixed-income security used to finance projects that have a positive impact on the environment, especially to provide solutions to climate change.

She noted that treasury bills were short-term securities issued at intervals of 91 days, 182 days, and 365 days respectively.

“The minimum for this investment is N50 million,” she said.

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