FGN Bonds are debt instruments issued by the Federal Government of Nigeria as a vehicle to raise funds for capital projects. The investor lends an amount of money to the government and earns interest (every 6 months) on the investment until the maturity of the bond when the principal amount will be repaid. Clients can access the market via the monthly primary market auction conducted by the Debt Management Office (DMO) on behalf of the Federal Government. However, clients who have the capacity of N100mn (standard trading volume) can purchase from the secondary market.
At the auction, the (DMO) determines volumes sold and the rate its sells to all investors using the single price auction system , and they are usually issued for tenors of: 3yrs, 5yrs, 7yrs, 10yrs and 20yrs.