fAbuja, Nigeria – The Federal Government has announced that investors interested in its newly issued domestic dollar bond must meet specific identification requirements to participate. According to a Frequently Asked Questions (FAQ) document released by the Debt Management Office (DMO) on its website, all Nigerian citizens, including those residing abroad, must possess a Bank Verification Number (BVN) and a National Identification Number (NIN) to subscribe to the bond, which was launched on Monday.
This bond, part of a broader $2 billion program, is the first tranche aiming to raise $500 million from both local and foreign investors. Eligible participants include Nigerians residing within the country, those in the diaspora with foreign exchange savings abroad, and foreign institutional investors.
The DMO’s FAQ specifies, “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 document also clarifies that cash payments are not permitted for the bond subscription. Instead, all payments must be made through electronic transfers into designated accounts.
Investors can subscribe to the bond either electronically or through financial institutions. Additionally, for those planning to use balances from their domiciliary accounts, the funds must have been in the account for at least 30 days before the application date.
The bond, which offers a 9.75% per annum coupon rate over a five-year tenor, is aimed at both domestic and international investors, with a minimum subscription amount set at $10,000. This bond is distinguished from traditional Eurobonds by its lower entry threshold, making it more accessible to a broader range of investors compared to the typical $200,000 required for Eurobonds.
The bond’s proceeds will be used to finance critical sectors of the Nigerian economy, as approved by President Bola Tinubu based on recommendations from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. The bond is also classified as liquid assets by the Central Bank of Nigeria, making it eligible for inclusion in banks’ liquidity ratio calculations and suitable for pension fund portfolios.
Income generated from the bond is exempt from several forms of taxation, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, making it an attractive option for investors. 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 subscription window for this bond will remain open until August 30, 2024, with the settlement date set for September 6, 2024. On this date, investors will have their purchases confirmed, and interest will begin accruing.
Minister Wale Edun emphasized that the $500 million domestic dollar bond will play a significant role in enhancing Nigeria’s external reserves and stabilizing the country’s foreign exchange situation.
