The Debt Management Office (DMO) has announced the opening of two new Federal Government of Nigeria (FGN) savings bonds for subscription.
The bonds are available from March 3 to March 7, 2025 and are part of the government’s strategy to attract retail investors and fund the 2025 budget, which requires over N13 trillion in new borrowing.
According to a statement released on the DMO’s X (formerly Twitter) handle on Monday, the first bond is a two-year FGN savings bond maturing on March 12, 2027 with an interest rate of 16.635% per annum.
The second is a three-year bond set to mature on March 12, 2028, offering a higher rate of 17.635% per annum.
Both bonds will settle on March 12, 2025 with interest payments scheduled quarterly on June 12, September 12, December 12 and March 12.
The bonds are offered at N1,000 per unit, with a minimum subscription of N5,000 and in multiples of N1,000 thereafter, up to a maximum of N50 million per investor.
The DMO said the bonds qualify as securities under the Trustee Investment Act and are listed on the Nigerian Exchange Limited (NGX).
They also count as liquid assets for banks, making them attractive for institutional investors seeking to meet liquidity requirements.
The government’s plan to borrow over N13 trillion this year to finance the 2025 budget reflects the urgency of mobilizing domestic resources to bridge the deficit.
“The high interest rates on these bonds reflect both the government’s borrowing needs and efforts to attract retail investors to the debt market,” said Tunde Adebayo, a financial analyst at Greenwich Merchant Bank. “For investors, the quarterly interest payments provide a steady income stream, making these bonds a viable option compared to savings accounts with lower yields.”
Despite the attractive interest rates, some analysts warn that the rising cost of domestic borrowing could exacerbate the government’s debt servicing burden, which already consumes a substantial portion of federal revenue.
The DMO’s latest data indicates that debt service-to-revenue ratio exceeded 80% in 2024, raising concerns about sustainability.
“Offering higher rates on FGN bonds could attract more investors, but it also raises the cost of servicing these debts in the future,” said Bisi Olaniyan, an economist at Proshare Nigeria. “The government must balance attracting investments with ensuring that debt servicing costs do not spiral out of control.”
The success of the new bond offering could also depend on the ability of the government to manage inflation and stabilize the naira.
With inflation averaging 21.5% in 2024 and the naira’s depreciation against major currencies, real returns on these bonds may be limited if inflationary pressures persist.
