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Investing in Federal Government of Nigeria (FGN) Bonds November 28, 2016

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What is an FGN Bond?

FGN Bonds are debt instruments issued through the Debt Management Office (DMO) to raise funds for the Federal Government and have a tenures of 5years, 10years and 20years. During the tenure, you will be paid interest bi- annually ( every 6 months ) based on the interest amount of the bond. For example, if your bond is 14.5% you will be paid an interest of 7.25% every six months for the tenure of the bond.  FGN Bonds are sold in monthly auctions (primary auction). The primary auction usually holds on the 3rdWednesday of every month.  After each auction, the marginal (average) rate is determined. Bids below the marginal rates are allocated at the rate you bid while bids above the marginal rate are not allocated. This means if your bid rate is too high, you may not get an allocation. You may then have to buy from the secondary market.

 

What are the Benefits of an FGN Bond to investors?

  • It serves as risk-free investment;
  • It provides relatively high and stable returns;
  • Bondholders that want cash can trade the bonds on the floor of Nigeria Stock Exchange(NSE) for immediate cash before maturity;
  • It qualifies as liquid assets for banks from two years to maturity.

 

Why should I invest in an FGN bond?

  • Building a house;
  • Paying your child’s school fees in the future (e.g for University education);
  • Starting or expanding a business;
  • Retirement;
  • Fund future social events such as marriages and weddings, etc;
  • Settlement after apprenticeship.

 

Contact United Capital Securities to place your bid today.

Private Client Sales: privateclientsales@unitedcapitalplcgroup.com or call +2341207596.