DMO offers new retail savings bond with 13.01% coupon

Debt Management Office DMO, has opened bidding for a new two-year savings bond targeted at retail investors with a coupon rate of 13.01 percent below the 14 per cent monetary policy rate of the Central Bank of Nigeria.

The Debt Management Office said the savings bond will help broaden the country’s funding base. It will be available for purchase on a monthly basis and have a maximum subscription of N50 million.

The bond will pay interest quarterly with a bullet repayment for principal at maturity. The initial offer will close on March 17, the DMO said. Nigeria forecasts it will have a budget deficit of N2.36 trillion  in 2017, half of which it aims to fund through domestic borrowing.

Outstanding local debt rose to N13.88 trillion last year from N8.83 trillion in 2015 and is set to increase further, as Nigeria’s economy grapples with its first recession in a quarter of century, caused by low oil prices. The government has said it will raise N130 billion at its third domestic debt sale this year on March 15 and sell N1.13 trillion worth of treasury bills by the second quarter.

Nigeria issued a $1 billion Eurobond last month and is now seeking approval from parliament for an additional $500 million Eurobond. It also plans to offer a N20 billion  “dollar bond” in April.