|
|
FirstBank Head Office
Samuel Asabia House
35, Marina,Lagos
P.O. Box 5216
Lagos Nigeria
Tel: 01-2665900-19
+234-1-905200
Fax: 01-2643166
Email: suggestions
@firstbanknigeria.com |
|
|
BONDS INVESTMENT
What is a Bond?
A long term debt instrument issued by an entity (company or
government), with a fixed or floating interest rate payable
on the principal. Interest payments, which are called coupon
payments, are commonly made every 6 months, that is, on a
semi-annual basis. In some cases, however, coupon payments
can be made quarterly, monthly or any other frequency. |
|
|
|
INDICATIVE QUOTES
(29-10-2008) |
|
BOND NAME |
ISSUE DATE |
MATURITY DATE |
TENOR |
COUPON |
PRICE |
YIELD |
|
|
|
|
|
|
OFFER |
OFFER |
|
3RD FGN BOND 2009 SERIES 11 |
7/28/2006 |
7/27/2009 |
3 YRS |
12.50% |
103.90 |
6.977% |
|
3RD FGN BOND 2009 SERIES 12 |
8/25/2006 |
8/24/2009 |
3 YRS |
12.00% |
103.90 |
6.981% |
|
3RD FGN BOND 2013 SERIES 13 |
9/29/2006 |
9/28/2011 |
5 YRS |
12.99% |
110.15 |
8.945% |
|
4TH FGN BOND 2010 SERIES 1 |
1/26/2007 |
1/26/2010 |
3 YRS |
10.75% |
102.80 |
8.297% |
|
4TH FGN BOND 2012 SERIES 2 |
2/23/2007 |
2/23/2012 |
5 YRS |
9.50% |
97.65 |
10.346% |
|
4TH FGN BOND 2014 SERIES 3 |
3/30/2007 |
3/30/2014 |
7 YRS |
10.75% |
101.10 |
10.474% |
|
4TH FGN BOND 2010 SERIES 4 |
4/27/2007 |
4/27/2010 |
3 YRS |
9.00% |
101.05 |
8.235% |
|
4TH FGN BOND 2012 SERIES 5 |
5/25/2007 |
5/25/2012 |
5 YRS |
9.23% |
96.65 |
10.373% |
|
4TH FGN BOND 2014 SERIES 6 |
6/29/2007 |
6/29/2014 |
7 YRS |
9.20% |
95.20 |
10.335% |
|
4TH FGN BOND 2010 SERIES 7 |
7/27/2007 |
7/27/2010 |
3 YRS |
7.95% |
98.20 |
9.077% |
|
4TH FGN BOND 2017 SERIES 8 |
7/27/2007 |
7/27/2017 |
10 YRS |
9.85% |
96.55 |
10.456% |
|
4TH FGN BOND 2017 SERIES 9 |
8/31/2007 |
8/31/2017 |
10 YRS |
9.35% |
85.80 |
11.995% |
|
4TH FGN BOND 2012 SERIES 10 |
8/31/2007 |
8/31/2012 |
5 YRS |
9.50% |
90.30 |
10.037% |
|
4TH FGN BOND 2012 SERIES 11 |
9/28/2007 |
9/28/2014 |
7 YRS |
9.25% |
99.80 |
9.293% |
|
4TH FGN BOND 2010 SERIES 12 |
10/26/2007 |
10/26/2010 |
3 YRS |
7.00% |
97.15 |
8.590% |
|
4TH FGN BOND 2010 SERIES 13 |
11/30/2007 |
11/30/2010 |
3 YRS |
9.20% |
99.05 |
9.707% |
|
4th FGN BOND 2010 SERIES 14 |
12/14/2007 |
12/14/2010 |
3 YRS |
8.99% |
98.05 |
10.023% |
|
5th FGN BOND 2013 SERIES 1 |
1/25/2008 |
1/25/2013 |
5 YRS |
9.45% |
94.60 |
11.073% |
|
5th FGN BOND 2013 SERIES 2 |
5/30/2008 |
5/30/2018 |
10 YRS |
10.70% |
91.95 |
12.140% |
|
5th FGN BOND 2011 SERIES 3 |
7/25/2008 |
25/07/02011 |
3YRS |
10.50% |
100.85 |
10.123% |
|
This publication is strictly for information purposes only. First Bank Plc and its employees make no representation as to the accuracy and completeness of the information contained in this publication. Therefore we accept no liability for any loss that may arise from the use of such information.
For further enquiries, please contact Treasury
Department.
234-1-3052402,234-1-3052122,234-1-3052115-7,234-1-4622144 and 234-1-4622285.
|
FREQUENTLY ASKED QUESTIONS
Back To Top
A. What is FGN Bond?
Bonds are long term securities (IOU) issued by the Federal
Government of Nigeria to provide funds for the provision of economic
infrastructure and social amenities for the citizenry. Given their
peculiar nature, they are referred to as risk free securities since
they are backed by the full faith and credit of the issuing
authority.
B. What are the available Tenors or Maturity?
Currently, FGN bonds have original tenors of 3, 5, 7 and 10 years.
However, prospective customers can buy bonds with tenors that are
less than the above maturities in the secondary market through any
branch of FirstBank
C. What are the Benefits of Investing in FGN Bonds?
The benefits of investing in FGN Bonds are:
- Safe and secure
- Stable income
- Tax free
- Eligible as a collateral for borrowing from banks
- Liquid – can be sold at any time
D. What is the Mode of Application?
- Prospective customer will pick, complete and submit Bond Purchase
Application Form from any First Bank branch. The form must be signed
by the customer and submitted to any branch
- The form must be accompanied with a complete CSCS Account Opening
Form if the customer does not have a CSCS account; otherwise the
CSCS account number is written on the application form
- Customer will make payments with a cheque or savings
withdrawal slip with a signed instruction on the reverse
side to cover the amount of the purchase
- Cash are not accepted for FGN Bonds transactions
- For KYC requirement, the customer must present identification
such as Driver’s Licence, International Passport and National ID
Card
E. What is the Return on Investment for FGN Bonds?
The returns (called yield to maturity) on the FGN Bonds are
determined by the prevailing interest rate in the money market at
any point in time. Currently, the yields ranged between 8% and 10%
for 3 and 10 years maturities, respectively in the secondary market.
The above yields are merely indicative and do not represent an offer
or bids from the prospective customer.
For the primary auctions, the coupon is determined by DMO based on
the amount on offer and the profile of demand/subscription for bonds
by the investing public in the market.
Coupon
The coupon is the amount the bondholder will receive
as interest payments on annual basis or semi-annual
basis depending on the terms of the bond. It's called a
"coupon" because sometimes there are physical coupons on
the bond that you tear off and redeem for interest.
Nowadays, records are more likely to be kept
electronically.
Coupon dates
The dates on which the issuer pays the
coupon to the bond holders.
Fixed-coupon bond
A bond with a fixed coupon to maturity.
Floating-coupon bond
A bond which its coupon is anchored on a
benchmark which is adjusted periodically base on to
a predetermined criteria.
Face Value/Par Value
The face value (also known as the par value or
principal) is the amount of money a holder will get back
once a bond matures. FGN bonds normally have a par value
of N1, 000. The par value is not the price of the bond.
A bond's price fluctuates throughout its life in
response to a number of variables.
Price
The price for a bond is stated as a percentage
of its face value, or par. It could be at N100 (par), or
N110 (premium) or N90 (discount).
Premium
When a bond trades at a price above the face value, it is
said to be selling at a premium.
Discount
When a bond sells below face value, it is said to be selling
at a discount.
Principal
The face amount of a bond, exclusive of accrued interest
and payable at maturity.
Maturity
The maturity date is the date in the future on which
the investor's principal will be repaid.
Yield to Maturity
Usually referred to as yield, is simply the rate of return
you get on a bond. Yield to maturity (YTM) is the total
return an investor will receive if he holds the bond to
maturity.
Bid
Bid is the price that a trader is willing to pay.
Offer (Ask)
Offer is the price that a trader is willing to sell.
Indenture/Covenant
Legal document which details the features of the bond. It is
to bond what a prospectus is to equity.
Bid/Offer spread
The difference between the price at which the dealer
buys a bond and the price at which he or she sells the
same bond – “profit”.
Basis Points
A basis point is a hundredth of a percentage point. For
instance, if a yield moves from 5.5% to 6, it has moved to
50 basis point.
Spread over governments
Non-federal government bonds ate often quoted on the
basis of a yield spread above a comparable FGN bond. A
corporate bond with a similar coupon and maturity date
could easily be 100 basis points higher in yield than a
federal government bond due to perceived credit risk
associated with the former.. In the terminology of bond
traders, this corporate bond is “100” beeps (basis
points) above governments.
|
|
