The Federal Government has announced that investors interested in the country’s new financial instrument are required to meet specific identification criteria in order to participate in the offer.
This information was shared in a Frequently Asked Questions document released by the Debt Management Office on its official website.
As outlined in the FAQ, all Nigerian citizens, including those living overseas, must have a Bank Verification Number (BVN) and a National Identification Number (NIN) to participate in the subscription for the domestic dollar bond launched on Monday.
This bond is part of a larger $2 billion initiative, with the government aiming to raise $500 million from both local and international investors in this initial phase.
Eligible participants encompass Nigerians residing in the country, those in the diaspora with foreign currency savings, as well as foreign institutional investors.
The FAQ read: “A BVN and NIN are required for subscription. Nigerians in diaspora can apply for both BVN and NIN if they don’t already have them.”
The DMO’s FAQ specifies that subscriptions for the Domestic FGN US Dollar Bond cannot be conducted using cash.
All payments are required to be made via electronic transfers to designated accounts. Subscriptions can be processed electronically or through financial institutions, as indicated in the FAQ.
Individuals planning to utilize funds from their domiciliary accounts for a subscription must be in the account for a minimum of 30 days before the application date.
This bond aims to finance vital sectors of the Nigerian economy, as sanctioned by the President based on the recommendations of the Minister of Finance and Coordinating Minister of the Economy.
With a coupon rate of 9.75 per cent per annum over a five-year period, the bonds are aimed at both domestic and international investors, with a minimum subscription threshold set at $10,000.
This bond is distinct from conventional Eurobonds, primarily due to its accessibility, featuring a lower entry requirement of $10,000 compared to the standard $200,000 for Eurobonds.
Additionally, it qualifies as a liquid asset under the Central Bank of Nigeria’s regulations, making it suitable for inclusion in banks’ liquidity ratio assessments and for pension fund investments.
The DMO’s FAQ also indicates that income generated from these bonds is exempt from various taxes, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, rendering them an appealing investment choice.
Furthermore, the bonds will be listed on both the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, providing liquidity for investors wishing to trade prior to maturity.
The auction for this bond will remain open until August 30, 2024, allowing investors ample opportunity to engage in this offering.
The settlement date, when investors will receive confirmation of their purchases and interest will commence accruing, is scheduled for September 6, 2024.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, previously stated that the $500 million domestic dollar bond will be issued.
