The Federal Government requires a Bank Verification Number (BVN) and National Identification Number for a $500 million bond subscription, investors interested in its latest financial instrument must meet the specific identification requirements to participate.
This information was provided in a Frequently Asked Questions (FAQ) document by the Debt Management Office (DMO) on its website.
According to the FAQ, all Nigerian citizens, including those living abroad, must have a Bank Verification Number (BVN) and a National Identification Number (NIN) to subscribe to the domestic dollar bond, which was issued on Monday
FG mandates BVN and NIN for $500m bond subscription.
The bond, part of a larger $2 billion program, is being issued domestically, with the government seeking to raise $500 million from both local and foreign investors in this initial offering.
Eligible participants include Nigerians residing in Nigeria, those in the diaspora with foreign exchange savings abroad, and foreign institutional investors.
The FAQ stated, “A BVN and NIN are required for subscription. Nigerians in the diaspora can apply for both BVN and NIN if they don’t already have them.”
The DMO also clarified in the FAQ that subscriptions to the Domestic FGN US Dollar Bond cannot be made in cash. Instead, all payments must be made through electronic transfers into designated accounts.
Subscriptions to the bond can be made electronically or through financial institutions. Additionally, 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.
The proceeds from the bond will be used to finance critical sectors of the Nigerian economy, as approved by the President based on the recommendation of the Minister of Finance and Coordinating Minister of the Economy.
The bond offers a 9.75% annual coupon rate over a five-year term and is targeted at both domestic and international investors, with a minimum subscription amount of $10,000.
This bond is different from traditional Eurobonds, primarily due to its lower entry threshold of $10,000 compared to the typical $200,000 required for Eurobonds.
It also meets the Central Bank of Nigeria’s criteria as liquid assets, making it eligible for inclusion in banks’ liquidity ratio calculations, and is also suitable for pension fund portfolios.
The DMO’s FAQ reveals that income from these bonds is exempt from several forms of taxation, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, making them an attractive investment option.
Also, the bonds will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, offering liquidity to investors who wish to trade before maturity.
The auction for this bond will remain open until August 30, 2024, giving investors a sufficient window to participate in this offering.
The settlement date, when investors will have their purchases confirmed and interest will begin accruing, is set for September 6, 2024.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, earlier said that the $500m domestic dollar bond will enhance external reserves and help stabilize the foreign exchange situation in the country.
