The Federal Government has commenced the auction of its savings bond for September this year. A savings bond is targeted at low-income earners to encourage them to save and earn more income (interest) when compared with their savings account with banks.
Savings bonds are tax-free with competitive fixed interest rates to be paid every quarter, and are tradeable on the Nigerian Stock Exchange. They can be used as collateral for loans. The FGN Savings Bond auction, according to the Debt Management Office, commenced on September 2 and would close on September 6.
The DMO said the two-year FGN Savings Bond was offered at 11.150 per cent per annum and would be due on September 11, 2021, while the three-year FGN Savings Bond was offered at 12.150 per cent per annum and would be due on September 11, 2022.
According to the offer notice, the interest on the savings bond is payable quarterly, with dates fixed on December 11, 2019, March 11, 2020, June 11, 2020 and September 11, 2020.
It said the bonds were offered at N1,000 per unit, subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50m.
The debt office said, “The bond qualifies as securities in which trustees can invest under the Trustee Investment Act. It also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for tax exemption and pension funds, among other investors.
“Interested investors are advised to contact the stockbroking firms appointed as distribution agents by the DMO.”