Monday, April 03, 2017 6.00pm/Proshare WebTV
Bonds issued by sovereigns like the FGN Retail Savings bonds of Nigeria, have been considered risk free for investments. This was the assertion of Mr Folagbade Adeyemi , Head Retail Sales at Vetiva Capital at the April Vetiva/Proshare tweet-meet session.
Focusing on the FGN Retail Savings Bonds recently listed on the Nigerian stock exchange by the Debt Management Office, Mr Adeyemi said as a debt instrument the bond was governed by rules around tenor and returns.
He described the #FGNsavingsbond as bonds issued by the Federal Government and are backed up by the full faith of the government. Speaking further Adeyemi noted that there was little uncertainty associated with this type of investment.
On the essence of the bond, the retail investment expert stated that the FGN Savings bond, was developed by the DMO to avail retail investors the opportunity to invest in low risk bonds which previously unavailable to them. The bond according to him “Allows the everyday man to enjoy the benefits of investing in bonds with a low initial investment”.
Highlighting the benefits of the bond , Adeyemi believed it helps to achieve the following; provides a good steady source of investment income, pays periodic returns to unit holders which is also known as coupons, affords the investor the opportunity to invest for a longer period and helps to guard against falling interest rates in the future.
Giving further explanation on coupons, he defined them as periodic interest on the bond investment calculated based on the interest of the bond, multiplied by the principal. They are typically paid every 6 months; while the FGN savings bonds are paid every 3 months.
For those that cannot wait for the bond to attain maturity, Mr Adeyemi advised that retail investors sell their bond through their stockbroker on the floor of the Nigerian stock exchange. He said “All they have to do is to give their stockbrokers the mandate to sell and it will be done on their behalf at the stock market”.
The Head of Retail Services for Vetiva Capital clarifying the eligibility of those to invest in the FGN Savings bonds stressed it was for anyone and everyone, and was ideal for anyone with a low risk appetite.With a minimum amount of about N5,000.00 a retail investor can through a stockbroker, invest in the FGN Savings bond.