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FGN Savings Bond to Debut Tomorrow

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  • FGN Savings Bond to Debut Tomorrow

The Federal Government through the Debt Management Office (DMO) will tomorrow record another milestone in the capital market with the debut of the Federal Government of Nigeria (FGN) Savings Bond. The offer, available exclusively on the Nigerian Stock Exchange, will be opened for five days effective Monday, March 13, 2017 and will be issued monthly thereafter. To ensure a successful take-off, DMO has accredited 87 stockbroking firms of the Nigerian Stock Exchange to market and distribute the Savings Bond.

The retail product will be issued monthly in tenors of two and three years, with quarterly payment of interest to investors. The minimum subscription amount is N5, 000.00 with additions in multiples of N1,000.00, subject to a maximum of N50,000,000.00. The bond is backed by the full faith and credit of the federal government. With a T+3 transaction settlement cycle, the bond, amongst several objectives was purposed to deepen the national savings culture, provide opportunity to all citizens irrespective of income level to contribute to National Development, enable all citizens participate in and benefit from the favorable returns available in the capital market and more importantly diversify funding sources for the government. A brokerage account is, however, required to participate in this bond programme.

The debut of this savings bond puts Nigeria in the league of sovereigns like Sweden, Thailand, Slovenia, Indonesia, United States, and United Kingdom with savings bond. Already, capital market operators are excited about the product and believe it would give fillip to the capital market particularly that has witnessed many retail investors depart since the downturn. Prior to now, the bond market is predominantly available to high networth investors to the detriment of low income investors. With the entry level for the savings bond, even students can afford to play in the space.

In an exclusive chat, Executive Director, Capital Market, NSE, Haruna Jalo-Waziri, said, “NSE Retail Bond Market was launched in 2012 with the aim of providing retail investors access to high quality debt instruments, as well as afford them portfolio diversification opportunities in an efficient and reliable way. The Launch of the Federal Government National Savings Bonds is consistent with the NSE’s commitment to grow domestic investor participation in the Nigerian Capital Market, and it is our pleasure to have worked with the DMO and the dealing member community to deliver yet another innovative product that will foster financial inclusion in Nigeria. After the offer closes, the bond will be listed on the NSE and can be traded on our Retail Bonds Market. DMO Accredited Distribution Agents and the Government Broker will provide liquidity by continuously making 2-way quotes throughout the trading session”

With an estimated population in excess of 150million, if the targeted audience successfully offtake this product, we shall be seeing yet another paradigm shift where ordinarily Nigerians irrespective of their income levels can pool resources to boost government’s effort to mobilise domestic capital required to fund priority sectors of the economy and ultimately serve as a catalyst for economic growth.

Tomorrow’s savings bond offer is coming on the back of recent innovative capital market instruments deployed by the federal government. Last week, it listed the first FX denominated bonds, Eurobond, on local bourses NSE and FMDQ to the delight of many capital market watchers. The bond, which was issued under Nigeria’s newly established Global Medium Term Note programme, is the third in the series after the ones in 2011 and 2013. The Notes will bear interest at a rate of 7.875 per cent and will mature on February 16, 2032, with a bullet repayment of the principal. The Eurobond is part of FGN’s funding strategy for its 2016 capital expenditure plan and will be utilised to fund key infrastructure projects, in line with its economic plan. With the minimum denomination to participate set at US$200,000 and increment of US$1000, only the medium to high income level investors could subscribe to the bond offer.

Speaking at the listing on NSE, the bourse’s Executive Director, Market Operations and Technology, Mr. Ade Bajomo, commended the DMO for listing the Eurobond on the nation’s bourse. He noted that the domestic listing would diversify its investors’ base by giving Nigerian institutional investors access to the bond.

Bajomo further remarked that, “The listing of the dollar-denominated bond on the exchange will boost price discovery and liquidity in the local market as well as help attract reliable long-term foreign currency denominated funds into the financial market. It will also set the foundation for raising and listing more foreign denominated securities in Nigeria which will open up additional capital raising options for issuers and portfolio diversification opportunities to investors”.

Going by the earlier commitment of the former Minister of Environment, Mrs Amina J. Mohammed, players in the capital market will yet have another product, the sovereign green bond join the list for discerning investors to put their funds in projects that supports sustainable projects to enhance living, protect our climate and environment. Last month, this aspiration received a boost from participants when the federal government met with investors and capital markets operators in Lagos for the first-ever Green Bonds Conference themed “Green Bonds: Investing in Nigeria’s Sustainable Development” and organised by the Federal Ministry Environment in collaboration with Federal Ministry of Finance and Debt Management Office. The event was headlined by the Acting President Yemi Osinbajo. Proceeds from the green bonds will fund identified projects in energy, agriculture, transport (FCT) and environment with international investors and business leaders expected to lead at the event.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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Banking Sector

BoI Grows Assets by 78.8% to N1.86 Trillion

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The Bank of Industry Group concluded the 2020 financial year with a 78.8 per cent growth of assets from N1.04tn to N1.86tn between 2019 and 2020.

A statement by the bank on Monday said the increase was driven to a large extent by the successful debt syndication of €1bn and $1bn that were concluded in March and December 2020 respectively.

BoI stated that the group’s financial statement demonstrated resilience and strength, noting that the period had significant challenges in the operating environment on account of the impact of COVID-19 pandemic on the economy.

“It also indicates synergy with the various interventions developed by the Federal Government, the Central Bank as well as other strategic partners towards ameliorating the impact of the pandemic on Nigerian enterprises,” the statement said.

The group’s total equity increased by 14.8 per cent from N293.08bn in the previous year to N336.48bn in 2020.

It added that as a reflection of the adverse impact of the challenging operating environment on growth of new facilities, loans and advances grew marginally in 2020 by 1.3 per cent to N749.84bn from the 2019 position.

The bank explained that this was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.

“The bank reviewed and restructured all its managed projects under the CBN intervention programme with interest rate reduction from nine to five per cent per annum for a period of one year and moratorium extension of three months (with a possible extension up to 12 months),” it said.

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Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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