THE interest rates attached to the September Federal Government of Nigeria (FGN) savings bond rose to 11.03 percent and 12.03 percent for the two-year and 3-year tenors, the highest in a year market data has shown.
Earlier in 2023, the coupon rates fell and dampened subscriptions as investors mulled over inflation-adjusted returns.
Dealers said the coupon rate rise should increase the demand for the bonds, especially amongst retail investors who invest between a minimum of N5,000 and N50 million.
The interest payment according to dealers would be made quarterly on December 13, March 13, June 13 and September 13, with a maturity date of September 2025 and 2026 for two-year and three-year, respectively.
The offer would be available from September 4 to 8, 2023, and the settlement date is scheduled for September 13. Analysts believe the offer suits investors with low-risk appetites and those interested in diversifying their portfolio.
In another development, Nigerian firms’ Commercial Papers (CP) issuances have been bumpy since April 2023 after falling from the peak issuance of N354.18 billion recorded in March 2023.
The issuance fell to N114.27 billion in April 2023 but mildly recovered in May, rising to N163.77 billion and eventually slumped to N82.13 billion in June 2023.
In July, issuance picked up slightly to N117.32billion.
According to dealers, the stifling business environment, inflationary pressure and rising borrowing costs have lessened the need for fresh capital injection, especially fast-moving consumer goods (FMCG), which was severely affected by recent policy reforms.
Analysts observed regular CP quotations in August, with four new CP registrations from Golden Oil Funding SPV, Lionseal Industries, Zylus Homes & Property Limited and Saroafrica Funding SPV Plc). This improved issuance should bundle up August’s total issuances above previous months, restoring it to an upward path. The issuances were predominately from financial services, manufacturing, commodities, and real estate sectors. Meanwhile, the outstanding value of CP has maintained an upward trend, rising from N221.56billion in January to N949.26billion in July. However, the monetary policy direction should dictate how the CP market will sway.
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