Nigerian Government Mandates BVN, NIN for Subscription to $500m Bond

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The Nigerian government has introduced stringent identification requirements for those looking to invest in its newly issued $500 million domestic dollar bond. According to a document released by the Debt Management Office (DMO), potential investors must provide both a Bank Verification Number (BVN) and a National Identification Number (NIN) to participate.

This bond, which is a part of a broader $2 billion financial program, is accessible to a variety of investors, including Nigerians living in the country, those residing abroad with foreign currency savings, and foreign institutional investors. Importantly, the bond can only be purchased through electronic transfers, as cash payments are strictly prohibited.

For Nigerian citizens abroad who do not already possess a BVN or NIN, the document specifies that they must apply for these identifiers before subscribing to the bond. Additionally, for those intending to use funds from their domiciliary accounts, these funds must have been held in the account for at least 30 days prior to the application.

With a 9.75% annual coupon rate over a five-year term, this bond aims to attract both domestic and international investors. The minimum subscription has been set at $10,000, making it significantly more accessible than traditional Eurobonds, which typically require a minimum investment of $200,000.

The proceeds from the bond issuance are earmarked for financing key sectors of the Nigerian economy, as approved by the President and recommended by the Minister of Finance. Furthermore, income generated from these bonds is exempt from various taxes, including Companies Income Tax, Personal Income Tax, and Capital Gains Tax, adding to their attractiveness.

Listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, these bonds offer liquidity options for investors who may wish to trade them before their maturity date. The subscription period will remain open until August 30, 2024, with the settlement date set for September 6, 2024. This is when purchases will be finalized, and interest accumulation will begin.

According to the Minister of Finance, Wale Edun, this initiative is expected to bolster Nigeria’s external reserves and stabilize the foreign exchange market.

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