Investors’ interest in the FGN Savings Bond seems to be growing as the value of subscription rose by 19.3 % to N17.9 billion Year-on-Year, YoY, as at end December 2023, a situation attributed to favourable interest rate regime among other factors.
The figure was N15.089 billion in the same period ended December 2022. Capital market operators have attributed the increased performance to favourable coupon rate (interest rate) when compared to the savings deposit rate in banks.
The coupon rate for two years FGN Savings bond stood at 12.287%, while that of three years stood at 13.287%. The bank’s savings deposit rate stood at 5.26%.
However, the latest Debt Management Office, DMO, The total number of successful subscriptions allotments of the Bond declined by 23.6% to 8,339 in the period under review as against 10,915 in 2022.
Meanwhile, the DMO had stated that it is more profitable for Nigerians to invest their monies in the FGN savings bonds than saving in banks. Director, Market Development Department at the DMO, Monday Usiade, had urged Nigerians to embrace investment in the various FGN Securities to enhance their earnings.
According to her, “Saving is a culture we must all imbibe, and the FGN savings bond has come to help Nigerians save.
“The driving force is to encourage us to save in a secure environment. The Federal Government cannot default on a loan in its own currency.”
She further said that, “ the various FGN securities, like the Treasury Bills, FGN Bond, FGN Savings Bond, Euro Bond, Green Bond and Sovereign Sukuk, were already competing with the banks.
“There is the need to challenge the banks to improve on their service delivery,” she said, adding that the FGN savings bond is specifically designed for retail investors, and to encourage financial inclusion.”
Commenting on the situation, Victor Chiazor, analyst and Head of Research and Investment at Fidelity Securities Limited, said: “The increased investors’ interest in FGN Savings Bond does not come as a surprise to many given that the coupon rate for FGN Savings bond is higher than bank’s savings deposit rate. So investors would commit their money to where they have higher returns.”
Similarly, David Adonri, Analyst and Executive Vice Chairman at Highcap Securities Limited, said: “The bullish stock market is making the FGN Savings Bonds flourish. The decline in the number of subscriptions is an indication that few investors who understood the market took advantage and that also led to the increased value as they committed more money.”
