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FG second N140 billion bond opens today

Posted by By Emma Ujah on 2005/07/11 | Views: 273 |

FG second N140 billion bond opens today


ABUJA—THE second federal government bond valued at N140 opens for public subscription today. The Debt Management Office (DMO) announced at the week that applications for the first tranche would close on Friday, July 15, 2005.

ABUJA—THE second federal government bond valued at N140 opens for public subscription today. The Debt Management Office (DMO) announced at the week that applications for the first tranche would close on Friday, July 15, 2005.

According to the Director-General, Dr. Mansur Muhtar, who spoke at stakeholders’’ forum in Abuja, that the bond would be in seven tranches of N20 billion which have been designed to run between this month and September.

He said that the Offer documents had been distributed to all branches of the Central bank of Nigeria (CBN) and that authorized dealers could collect them in order to make same available for prospective allottees.

According to Dr. Muhtar, this second bond would be auction-based and Offer circulars would be used instead of Prospectus, while the 2-3 year-tenored instruments would be submitted through authorized dealers.

"Issuance of the bonds will not be subject to the hitherto time-consuming, cumbersome and costly processes and procedures of registration and filing as there is an exemption of DMO and FGN Bond Issuance process by the Minister of Finance from operations of the provisions of the Investment and Securities Act as stated in the Investment and Securities (Exemption) Order", he said.

The D-G said that the restructuring of the 91-day Treasury Bills (TBs) into longer tenured bonds would reduce roll-over risks, smoothen money market volatility, modulate short-term interest rate movements and contribute to the achievement of the medium to long-term objective of lower levels of interest rates over the whole spectrum of the tenor.

"It will also help sustain the revival and development of a vibrant, deep and liquid secondary market for bonds. More importantly, by facilitating the development of the market for longer-tenured funds, the regular issuance exercises will enable the private sector to source appropriate funds for the development of the real sector of the economy", he said.

The DMO boss said the overall objective of the restructuring was to increase the volume of Long-term instruments and reduce short-term ones as was the case in other nations of the world.

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