There are signs of waning investor interest in the FGN Savings Bond, with the subscription value decreasing by 14.4% to N8.8 billion Year-on-Year (YoY) by the end of August 31, 2023. This decline is attributed to factors such as the rising inflation rate. In comparison, the subscription value was N10.287 billion for the same period ending August 31, 2022. Data from the Debt Management Office (DMO) also indicates a 26.

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9% decrease in bond allotments, with 4689 allotments in the eight-month period ending August 2023, compared to 6413 in the corresponding period of 2022. Market experts and stakeholders point to the declining performance of the bond, citing reduced purchasing power due to the sharp increase in inflation, which reached an all-time high of 25.8% in August 2023.

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Vanguard's investigation reveals that the value of transactions has been volatile throughout this year.

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Commenting on the situation, Victor Chiazor,    analyst and Head of Research and Investment at Fidelity Securities Limited, said: “The reduced investors’ interest in FGN Savings Bond does not come as a surprise to many given the continuous rise in inflation rate that does not match with the Minimum Rediscount Rate, MRR, and increased volatility being experienced in the equities market.

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“The low disposable income of investors is a major factor that could also be responsible for the low appetite as there are other viable options like equities. “Recall the massive flow of investment into the FGN Savings Bond when the equities market was bearish and activities around the market were flat.

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“However, with this season we have seen a higher level of volatility in the equities market and if this momentum is sustained we will continue to see reduced investment in the FGN savings bond for the rest of the year, except the government significantly increases the interest rate to levels that becomes more attractive to the market.

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” Commenting, analyst and Vice Executive Chairman, Highcap Securities Limited, David Adonri, said: “Concerning the decline in subscription for FGN Savings Bond, the dwindling disposable income of retail investors who are target of the product may be responsible. Yield on Savings Bond is also not competitive when compared to orthodox FGN Bonds or SUKUK.

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” Commenting as well, analyst and Managing Director, APT Securities said: “The good performance of the equities market could have led to the low level of investment in the FGN Savings Bond as more investors divested to stocks. Also, the rise in inflation to 25.8 % makes investment into FGN Savings Bond with negative returns reduced. With upsurge of the stock market there is likely hope of further decline in FGN Savings Bond.”

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