The Nigerian Stock Exchange (NSE), on Sunday said Monday’s planned launch of Federal Government’s savings bond, which opens for subscription exclusively on the trading platform will boost the nation’s financial inclusion agenda.
According to its Executive Director, Capital Market Division, Haruna Waziri-Jalo, while commenting on the sovereign bond targeted at retail investors, recalled that NSE Retail Bond Market was launched in 2012 to offer “retail investors access to high quality debt instruments, as well as afford them portfolio diversification opportunities in an efficient and reliable way.
“The Launch of the Federal Government National Savings Bonds is consistent with the NSE’s commitment to grow domestic investor participation in the Nigerian Capital Market, and it is our pleasure to have worked with the DMO and the Dealing Member community to deliver yet another innovative product that will foster financial inclusion in Nigeria.
A statement by the NSE explained that as part of efforts to ensure no subscriber is left out of the offer, the DMO accredited 87 stockbroking firms of the NSE to market and distribute the Savings Bond.
The retail bond which is backed by the full faith and credit of the Federal Government of Nigeria, will be offered monthly in tenors of 2 and 3 years, with quarterly payment of interest to investors, with a minimum subscription amount of N5,000.00 and additions in multiples of N1, 000.00, subject to a maximum of N50, 000,000.
Amongst its several objectives, the statement explained, the bond is expected to further deepen the national savings culture, provide opportunity to all citizens irrespective of income level to contribute to National Development, enable all citizens participate in and benefit from the favorable returns available in the capital market and more importantly diversify funding sources for the Government.
The debut of this savings bond, the statement continues, puts Nigeria in the league of sovereigns like Sweden, Thailand, Slovenia, Indonesia, United States, and United Kingdom with savings bonds. Already, capital market operators are excited about the product and believe it can act as a fillip to lift the capital market particularly that has seen many retail investors depart since the downward. Prior to now, the bond market is predominantly available to high net worth investors to the detriment of low income investors. With the entry level for the savings bond, even students can afford to play in the space.
Waziri-Jallo, also explained that “after the offer closes, the bond will be listed on the NSE and can be traded on our Retail Bonds Market. DMO Accredited Distribution Agents and the Government Broker will provide liquidity by continuously making 2-way quotes throughout the trading session”
With Nigeria’s population in excess of 150 million, the NSE believes that should the targeted audience successfully off-take the offer, “we shall be seeing yet another paradigm shift where ordinary Nigerians irrespective of their income levels can pool resources to boost Government’s effort to mobilize domestic capital required to fund priority sectors of the economy and ultimately serve as a catalyst for economic growth.
The launch of this savings bond offer is coming on the back of recent innovative capital market instruments deployed by the Federal Government of Nigeria (FGN) having listed the first FX denominated bonds, Eurobond on local bourses, firstly at NSE and to the delight of many capital market watchers.
In this month, investors also witnessed the introduction of the first sovereign green bond as stated by erstwhile Minister of Environment, Mrs Amina Mohammed at the first ever Green Bonds Conference themed “Green Bonds: Investing in Nigeria’s Sustainable Development” and organized by the Federal Ministry Environment in collaboration with Federal Ministry of Finance and Debt Management Office.
The event was headlined by the then Acting President, Professor Yemi Osinbajo. Proceeds from the green bonds will fund identified projects in Energy, Agriculture, Transport (FCT) and Environment with international investors and business leaders expected to lead at the event.
