The servicing of debts acquired through instruments issued by the federal government in the Nigerian capital market stood at NN2.18 billion as of October 30, an analysis of the data by our correspondent showed.
Data from debt securities listed on the FMDQ exchange showed that FG repayments of bonds, promissory notes, sukuk, savings and green bonds totaled 2.18 billion naira. .
FG bond payments are structured with coupons paid semi-annually and are used to finance specific infrastructure projects.
Nigeria’s Debt Management Office revealed in its reports on actual domestic debt service for January-March and April-June that the federal government’s total domestic debt service had engulfed N546.25 billion and N307.87 billion, respectively. This means that the FG spent 854.12 billion naira servicing debts in the capital markets during the first half of the year.
The Federal Government completed the payment of its NGFG132021S0 July 2016 N561.05bn with a coupon of 14.5 percent as it paid a tranche of N20.3bn in February and another N20.3bn in July, for a total of N601 , 73bn.
The federal government serviced its NGFG9B2022S1 January 2022 N605.31bn bond with a 16.39% coupon as it paid N99.21bn in two installments in January and June.
The federal government managed another 12.75 percent coupon bond in April 2023 with N735.96 billion with the payment of N93.83 billion in two installments, April and October.
A 13.53 percent N267.78bn March 2025 bond was served with total March and September payments of N36.23bn.
The January 2026 FG N784.45 billion bond with a coupon of 12.5% was managed with total January and June payments of N98.06 billion.
FG made a total of 102.24 billion naira in two payments for its March 2027 bond of 948.48 billion naira with a coupon of 16.2884% in March and September.
The February 2028 bond of 955.93 billion naira with a 13.98% coupon swallowed up two interest payments in February and August, for a total of 133.64 billion naira.
The federal government also made a payment of 5.63 billion naira on a 15 percent bond of 75 billion naira in November 2028 and will complete the 2021 service with another 5.63 billion naira by the end of November.
In two installments of April and October totaling 97.1 billion naira, FG serviced its 14.55% bond at 667.38 billion, while it paid 9.37 billion naira in May for its 12.49% n 150 billion bond of May 2029.
Explaining why investors were attracted to bonds issued by FG, CEO of Credent Investment Managers, Ibrahim Shelleng, said: “FGN securities remain attractive due to their supposed ‘risk-free’ nature. “Globally, government securities are considered almost risk-free because it is assumed that a government cannot go bankrupt as long as the sovereign entity remains. So institutional investors such as pension funds would always invest there. “
Olaide Baanu, Research Analyst at Atlas Portfolios Limited, said: “Investors choose FGN bonds for the safety and preservation of funds. An average investor wants where his capital is guaranteed, regardless of low or high returns.
Speaking on the matter, Shelleng said coupon rates need to be attractive to attract foreign investors who bring much needed forex liquidity to the market.
Mr Sola Oni, CEO of Sofunix Investments and Communications, said there was an irrevocable standing order that mandated the federal government to operate a special purpose vehicle to protect against defaulting on the obligation.
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