A FGN Savings bond is a ‘revolving’ 91-day FGN Treasury Bill with higher coupon rate (by >1-2% p.a above av. T-bill rate).
Normally for a min. N10,000 investment, all foreign & local retail investors can create their own savings plan on the NGSE (Nigerian Stock Exchange) bond market to finance their respective target project(s) (e.g rent, pension, property purchase, health charges, school fees etc) by purchasing FGN Bonds via a licensed stockbroker (like TRW Stockbrokers) directly into their CSCS digital custodian account (which is actually their CSCS Trading Account with their stockbroker) while getting better annual interest rates (>12% p.a) than those available at commercial banks (3 – 6% p.a).
In order to replicate money market (CBN OMO bills & FGN T-bills) characteristics when retail investors are creating/maintaining their high yield savings plan, our ARMF Bond Portfolio (a prop closed fund) is providing modified savings product(s) to retail investors, for example:
(1) Upfront Quarterly Interest Payment Savings Scheme
For example, for a min. N100,000 investment, an investor who desires to buy 3 – 36 months FGN Savings bonds (also known as “revolving 91-day FGN T-bills”) on the DMO primary auction and/or on the NGSE secondary bond market via TRW Stockbrokers Ltd will be paid upfront his/her expected quarterly interest by our ARMF Bond Portfolio directly into the client’s bank acct or into the client’s CSCS trading acct with TRW Stockbrokers as mandated.
For a min. N100,000 investment, an investor who desires to buy 1 – 20 yrs FGN Treasury/Sukuk/Green bonds via DMO primary auction and/or on the FMDQ/NGSE secondary bond market (via TRW Stockbrokers Ltd) will also be paid upfront his/her expected half-year interest on a quarterly basis by our ARMF Bond Portfolio directly into the client’s bank acct or into the client’s CSCS trading acct with TRW Stockbrokers as mandated.
ARMF Bond Portfolio will charge a 10% funding fee. The process will revolve every quarter beginning till bond maturity unless the investor makes an urgent sales mandate before the bond’s maturity. The purchased FGN bonds are kept under the custody of TRW Stockbrokers Limited.
For example, a successful primary auction bid of N100,000 investment in a 3-yr FGN S-bond this Sept-2018 DMO PMA (FGS202137: 12.364% FGNSB 12 SEPT-2021) would receive (at the beginning of every quarter) a gross upfront quarterly interest of N3.091 minus a 10% funding charge of N309.10 => a net upfront quarterly interest of N2,789.10
(2) Early Withdrawal Penalty & Buy-Back Before Bond Maturity Under The Upfront Interest Savings Scheme
Retail investors who mandate a ”fire-sell” of their FGN Bonds before the expiration of the pre-agreed bond holding period under the Upfront Interest Savings Scheme will have their sales mandate executed as follows:
- If a client wants to fire-sell his/her FGN bonds with coupon >14% p.a, our ARMF Bond Portfolio can buy-back at a max. bid clean price of N950.00 per bond thus a 5% discount;
- If a client wants to fire-sell his/her FGN bonds with coupon btw 13% – 14% p.a then our ARMF Bond Portfolio can buy-back at a max. bid clean price of N900.00 per bond thus a 10% discount;
- If a client wants to fire-sell his/her FGN bonds with coupon <13% p.a then our ARMF Bond Portfolio can buy-back at a max. bid clean price of N850.00 per bill thus a 15% discount;
- If the secondary bond market bids are better than ARMF Bond Portfolio’s bids, then the bonds will be sold directly on the market;
- The last ‘paid’ upfront quarterly interest will be refunded by the client in full i.e 100% interest value minus accrued interest for the quarterly period.
We have decided to place these withdrawal terms in order to prevent the use of the savings scheme for speculative purposes and to ensure investors save properly for their various target development/finance purposes. Thus, make sure that You choose the suitable bond maturity tenure/duration that serves your savings/investment purposes !!!
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 higher) coupon for Your FGN bonds purchase, please contact directly Ekwueme Mike Anyadibe (080 6656 4748 and/or e-mail: firstname.lastname@example.org and/or live during trading hours via skype #ID: respartner): Head, Fixed Income Sales.
TRW BOND TEAM
Corporate Office: 62/64 Campbell Street (Kajola House)
4th Floor Lagos Island Lagos .
Email: email@example.com; firstname.lastname@example.org