The Federal Government of Nigeria has mandated that investors must provide specific identification details to participate in its latest financial instrument offering. According to a Frequently Asked Questions (FAQ) document from the Debt Management Office (DMO), all Nigerian citizens, whether residing domestically or abroad, must possess a Bank Verification Number (BVN) and a National Identification Number (NIN) to subscribe to the newly issued domestic dollar bond.
This bond, part of a broader $2 billion program, is seeking to raise $500 million in this first tranche. It is open to Nigerians residing in Nigeria, those in the diaspora with foreign exchange savings, and foreign institutional investors.
The FAQ states: “A BVN and NIN are required for subscription. Nigerians abroad can apply for both BVN and NIN if they do not already have them.”
The DMO specifies that subscriptions must be made electronically or through financial institutions, with no cash transactions allowed. Funds used from domiciliary accounts for subscription must have been in the account for at least 30 days before the application date.
The bond, issued at a 9.75% annual coupon rate with a five-year tenor, is designed to finance critical sectors of the Nigerian economy. It features a lower entry threshold of $10,000, compared to the typical $200,000 for Eurobonds, making it accessible to a broader range of investors.
Additionally, this bond meets the Central Bank of Nigeria’s criteria for liquid assets, qualifying for inclusion in banks’ liquidity ratio calculations and pension fund portfolios. Income from the bonds is exempt from several forms of taxation, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, enhancing their appeal.
The bonds will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, providing liquidity for investors who wish to trade before maturity. The auction will remain open until August 30, 2024, with the settlement date set for September 6, 2024. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the bond will strengthen external reserves and help stabilize the foreign exchange situation in the country.
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