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The Federal Government has announced that investors wishing to participate in its latest bond offering must meet specific identification requirements.
In a document of Frequently Asked Questions (FAQ) provided by the Debt Management Office (DMO) on its website, the government stated that all Nigerian citizens, including those residing abroad, must have a Bank Verification Number (BVN) and a National Identification Number (NIN) to subscribe to the domestic dollar bond, which was issued on Monday.
This bond, which is part of a larger $2 billion program, aims to raise $500 million from both local and foreign investors in this initial tranche.
Eligible participants include Nigerians living in Nigeria, those in the diaspora with foreign exchange savings, and foreign institutional investors.
The FAQ explains, “A BVN and NIN are required for subscription. Nigerians in the diaspora can apply for both BVN and NIN if they do not already have them.”
Additionally, the DMO clarified that cash payments are not accepted for subscriptions to the Domestic FGN US Dollar Bond. All transactions must be conducted via electronic transfers into designated accounts.
Investors can subscribe electronically or through financial institutions, and those using funds from domiciliary accounts must ensure that the funds have been in the account for at least 30 days before applying.
The proceeds from the bond will be allocated to critical sectors of the Nigerian economy, as approved by the President on the recommendation of the Minister of Finance and Coordinating Minister of the Economy.
Offering a 9.75% annual coupon rate over a five-year tenor, the bond is designed for both domestic and international investors, with a minimum subscription of $10,000.
This bond differs from traditional Eurobonds, primarily due to its lower entry threshold of $10,000, compared to the typical $200,000 required for Eurobonds.
Moreover, the bond meets the Central Bank of Nigeria’s criteria as liquid assets, making it eligible for inclusion in banks’ liquidity ratio calculations and suitable for pension fund portfolios.
The DMO’s FAQ also highlights that income from these bonds is exempt from several taxes, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, making it an attractive investment option.
Furthermore, the bonds will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, providing liquidity to investors who wish to trade before maturity.
The auction for this bond will remain open until August 30, 2024, giving investors ample time to participate. The settlement date, when purchases will be confirmed and interest will begin accruing, is set for September 6, 2024.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, previously stated that the $500 million domestic dollar bond would bolster external reserves and contribute to stabilizing Nigeria’s foreign exchange situation.
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