BY MICHAEL EBOH

The Federal Government of Nigeria will redeem bonds worth N456 billion to investors this year. A breakdown of the bonds shows that five Federal Government of Nigeria’s, FGN, bonds, with five-year and three-year maturity periods will be redeemed between January and August of the current year.

The bonds with five-year maturity periods include: the 4th FGN Bond 2012 Series 2, valued at N35 billion and a maturity date of February 2012; 4th FGN Bond 2012 Series 5, valued at N50 billion with a maturity date of May and 4th FGN Bond 2012 Series 10, valued at N46 billion and with a maturity date of August 2012.

While the three-year bonds are: 6th FGN Bond Series 1, valued at N125 billion, with a maturity date of January; and 6th FGN Bond 2012 Series 2, valued at N200 billion with a maturity date of May 2012.

The bonds have been renamed 9.50% FGN February 2012, 9.23% FGN May 2012, 9.50% FGN August 2012, 9.92% FGN January 2012 and 10.50% FGN May 2012, with interest rates of 9.5 per cent, 9.23 per cent, 9.5 per cent, 9.92 per cent and 10.50 per cent respectively.

The five-year bonds were issued between February 23 and August 31, 2007 while the three year bonds were issued in January and May 2009.

Meanwhile, the Securities and Exchange Commission, SEC, said it gave approval to five states to raise N124 billion from the bond segment of the Nigerian capital market in 2011.

The states, according to a statement obtained from SEC’s website include: Ondo, Ekiti, Delta, Niger and Benue States.

Ondo State secured SEC’s approval to raise N27 billion, Ekiti State – N25 billion, Delta State – N50 billion Niger State – N9 billion and Benue State – N13 billion.

However, SEC is yet to grant approval to two states — Zamfara and Ogun States, to raise N46.75 billion from the bond market.

Zamfara State Government’s quest to raise N18.75 billion at 14 per cent fixed rate is yet to secure the approval of the apex capital market regulator. According to SEC, the approval is been delayed due to the fact that there is an outstanding issue with regards to underwriting.

On the part of Ogun State’s quest to raise N28 billion from the bond market, SEC said the delay in the approval of the bond is due to incomplete documentation.

Zamfara State had said proceeds from the bond programme would be used to repay existing loan obligations while Ogun State said its proceeds would be used to refinance loans on existing infrastructural projects, roads construction and rehabilitation, Gateway International Airport, Gateway Holding Complex and other projects.

SEC had advised issuers of bonds that it is important that they or their financial advisors guide them issuer as well as file complete and quality information, as this will help expedite the approval process and the bond issue programme.

According to SEC, to cut time for approval, the issuer and its advisors should ensure the submission of complete information; ensure necessary approvals, such as approvals by Annual General Meetings, Board; ensure that they secure the necessary credit ratings and secure the necessary Irrevocable Standing Payment Order, ISPO, application to the issue.

SEC also said the issuers should ensure that they do not submit piece-meal documentation; respond to questions promptly; respond to letters of deficiency promptly.

SEC said if the proper documentation is received, it will take no more than six weeks for it to approve a filing.

It said, “If complete and quality documents are received at the SEC, it should take no more than two to three weeks for SEC approval. Upon the approval two year period), subsequent tranches for issuances should take only a few days at most.”