FG Requires BVN, NIN for $500m Domestic Dollar Bond Subscription

The Federal Government has mandated that investors interested in subscribing to its newly issued $500 million domestic dollar bond must meet specific identification requirements. According to a Frequently Asked Questions (FAQ) document released by the Debt Management Office (DMO) on its website, all Nigerian citizens, including those living abroad, must possess both a Bank Verification Number (BVN) and a National Identification Number (NIN) to participate in this financial exercise. The bond, which is part of a larger $2 billion program, was launched on Monday and is open to local and foreign investors alike. Eligible participants include Nigerians residing in the country, those in the diaspora with foreign exchange savings abroad, and foreign institutional investors. The DMO's FAQ emphasizes that Nigerians in the diaspora who do not already have a BVN and NIN can apply for them to become eligible for the bond subscription. Importantly, the DMO clarified that subscriptions to the bond cannot be made in cash. Instead, all payments must be conducted through electronic transfers to designated accounts. Investors can subscribe electronically or through financial institutions. For those intending to use funds from their domiciliary accounts, the funds must have been in the account for at least 30 days before the application date.

This bond issuance aims to finance critical sectors of the Nigerian economy, as approved by the President on the recommendation of the Minister of Finance and Coordinating Minister of the Economy. The bonds carry a 9.75 percent per annum coupon rate over a five-year tenor, making them an attractive investment for both domestic and international investors. The minimum subscription amount for this bond is $10,000, which is significantly lower than the $200,000 minimum required for traditional Eurobonds. Additionally, the bonds meet the Central Bank of Nigeria’s criteria as liquid assets, making them eligible for inclusion in banks’ liquidity ratio calculations. They are also suitable for pension fund portfolios. The FAQ highlights that income from these bonds is exempt from several taxes, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, further enhancing their appeal as an investment option.

The bonds will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, offering liquidity for investors who wish to trade before the bond's maturity. The auction for this bond will remain open until August 30, 2024, providing investors ample time to participate. The settlement date, when purchases will be confirmed and interest will begin accruing, is set for September 6, 2024. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the $500 million domestic dollar bond will bolster Nigeria’s external reserves and contribute to stabilizing the country’s foreign exchange situation.