The Debt Management Office (DMO) on Wednesday, disclosed plans by the Federal Government of Nigeria to issue a new savings bonds aimed at retail investors.

“The bonds will be good for savings towards retirement, marriage, school fees, house projects,” the debt office said.

The bond which is expected to be sold this month will offer two and three-year maturities with interest to be paid every three months. Though the interest rate on the bond has not been disclosed, savings accounts at Nigeria's commercial banks pay about 5% in interest. As a matter of fact, the DMO in January paid 16.5% on a five-year bond sold to institutional investors.

According to the debt office, offer for the bond in question will be open on March 13 and closed after five days. It said new issues will be sold every month and the minimum subscription will be N5,000 ($16) and the maximum N50 million ($159, 000).

Nigeria's government has resorted to local borrowing to fund over half of its 2016 budget deficit which is estimated to reach N2.36 trillion naira ($7.6 billion) this year. In January, it sold a $1 billion Eurobond and it is currently seeking for approval for another $500 million Eurobond from the parliament to plug this deficit.

It also plans to sell a $300 million diaspora bond abroad this year and issue its first sovereign Sukuk in the local market.

Anita Fatunji