The Federal Government has unveiled a strategic plan to float a Savings Bond, The Debt Management Office (DMO) Director-General Dr. Abraham Nwankwo broke the news at a media briefing in Abuja.
He said, the move is to encourage the public, especially low income earners to save, invest and earn commensurate returns from their investments.
According to Nwankwo, the new instrument was part of the strategic plans for 2013-2017 with the objective to deepen and broaden federal government’s securities market in order to sustain the development of other segments of the bond market.
Nwankwo said the proposed Federal Government of Nigeria (FGN) Savings Bond would provide an opportunity for Nigerians across all income segments to invest in bonds.
He said the new bond which would be issued before the end of the first quarter of this year will offer investment opportunities from as low as N5,000 to additional multiples of N1,000 subject to a maximum of N50 million.
Nwankwo added that the proposed financial instrument will have a tenore of between two and three years at a competitive fixed interest rate that would be announced by the DMO on the first working day of every month or as may be determined by the organisation from time to time.
He said: “The rationale for the issuance of FGN Savings Bond are to deepen the national savings culture, diversify funding sources for the government and establish a benchmark for other issuers of bonds in the country. It offers guaranteed returns, helps to stimulate and deepen the savings culture among households and encourage financial inclusion. It enables individuals to enjoy those benefits which accrue to big investors in the capital market.
“Savings bond also helps to increase access to funds available for investment in the economy, thereby floating gross capital formation and increase in output within an economy.
“Investors can subscribe through the over 100 stockbroking firms trading on the floor of the Nigerian Stock Exchange (NSE) and accredited by the DMO to act as Distribution Agents. Every month, subscription shall open same day the price is announced and investors will have five working days to put in their subscription through the distribution agents,” he said.
Nwankwo disclosed that DMO was buoyed to float the new savings bond following the success it recorded in the $1billion Eurobond it recently floated at the international financial market.
He explained that the Eurobond was floated to enable the government secure more fund for the execution of key infrastructure projects in the 2016 budget.