CBN has banned on local non-commercial banking investors (like individual & corporate investors) from participation in it’s OMO bills primary & secondary market operations (except for foreign investors & local commercial banks) and limited their access to the FGN Treasury Bills” & Bonds” primary & secondary market operations. Thus, FGN Treasury & Savings Bonds on the NGSE/FMDQ exchanges are the alternative fixed income securities that can give local non-commercial banking investors higher yields than FGN T-bills and also similar yields to those obtained in the CBN OMO-bills market.
N.B: Your fixed savings account on the NGSE is actually Your CSCS Account.
We will try to execute purchase/sales order mandates on FGN treasury bonds & FGN savings bonds at near the last e-o-wk (end of week) market rates as shown below:
Bond Tenor (Years) Current Market Yield (%) Q’ty In W/H (=N= in MLN)
2020 1 2.95
2021 2 7.05 50
2022 3 8.39
2023 4 9.27
2024 5 9.66
2025 6 10.13
2026 7 10.44
2027 8 10.75
2028 9 10.89
2029 10 10.95
2030 11 11.02
2034 15 11.30
2036 17 11.31
2037 18 11.43
2049 30 12.49
N.B: A Typical FGN Savings Bond is a ”revolving” 90-day FGN Treasury Bill.
Standard fixed savings acct opening starts at min. N5,000 where your CSCS acct acts as your e-custodian & e-savings account within the CBN S4 platform. Under the savings product – Upfront Interest Savings Scheme. which starts at min. savings order of N100,000.00 – only FGN bonds with coupon >7% p.a qualify to be allocated to bond clients.
- What is the effective yield of a FGN bond under the upfront interest savings scheme? – it is calculated by deducting the sum of transaction charges and/or upfront funding expenses from the total yield till maturity (excl. compounding opportunity) and divided by the holding period, for example, purchased at ‘par’ NIGTB 14.2% 14-MAR-2024 (FG112024S1) and held for 5-yrs to maturity => estimated effective yield of 12.6% p.a
- What is the current 91-day FGN T-bill PMA rate ? – 2.95% p.a
- What is the current commercial banks av. savings deposit rate according to CBN ? – 3.93% p.a
- What will be the increment to the bond’s effective rate under the upfront interest savings scheme if the quarterly upfront interest(s) were compounded (re-invested) in 12-month TTM FGN bonds with coupon >7% for example? – we estimate an increment of 0.583% p.a on the respective FGN bonds’ effective rate. Thus, compounding is an investment strategy that should never be ignored !!!
- Must i have a CSCS trading acct with TRW Stockbrokers Limited to participate? – preferably YES !!!
ARMF Bond Portfolio has opened a new sub-product called ”collaterized security margin trading” which is accessible only to bond investors under the Upfront Interest Savings Scheme starting from a min. fixed savings of N1MLN @ margin loan rate of 0.0822% per day (pro rata).
Thus, savers can now leverage on their bonds (fixed savings) under the upfront interest savings scheme to obtain fresh cash to invest on the NGSE equity and/or derivative market(s). A N1MLN fixed savings will gain access to an equivalent N1MLN margin loan => N2MLN margin account => leverage ratio (asset/equity) of 200% (2:1).
Margin Loan Window: Open
Marginable Equity Securities: AFRIPRUD, ACCESS, UACN, FLOURMILL, BUACEMENT, UBA
ARMF Bond portfolio re-opens its sourcing for funds upto N500MLN to be used for the following:
- to finance upfront quarterly interest payments to bond savers under the upfront interest savings scheme;
- to finance collaterized margin loans to bond savers who want to leverage on their bonds (fixed savings) under the upfront interest savings scheme in order to obtain fresh cash to invest on the equity and/or derivative market(s);
- participation starts from min. N50MLN at a ”negotiable” annual fixed interest rate for a 12-month revolving holding period.
ARMF Bond Portfolio upfront funding & margin loan rate(s) were reduced from 40% p.a to 30% p.a starting 1st January-2020 due to the local falling lending rate environment.
Caution – selling bonds on the secondary bond market before maturity, can either incur capital loss or capital gain !!!!
Should you require further information on how to get the best (and/or highest) annual interest on Your savings, please contact directly:
Contact Person: Ekwueme Mike Anyadibe
E-mail: firstname.lastname@example.org or email@example.com
Skype #ID: respartner
TRW Stockbrokers Limited
Corporate Office: 62/64 Campbell Street (Kajola House)
4th Floor Lagos Island Lagos .