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Eurobonds investment – How to invest in Eurobonds in Nigeria

Eurobonds investment – How to invest in Eurobonds in Nigeria

Eurobonds investment – At the mention of Eurobonds a lot of questions have continued to grill my mail box, particularly from my loyal readers, enquiring to be detailed on the concept of Eurobonds as an investment.

In this guide, I will explain in details the concept Eurobond investment and how to go about it in Nigeria.

What is Eurobonds?

These are bonds which investment are denominated in a currency order than that of the issuing country. That sounds like a big grammar right?

An Eurobond selling in Nigeria is not denominated in “Naira,” rather in USD.

Simply put, this is a bond issued by the Federal Government of Nigeria in Nigeria, however denominated in USD.

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Ø  Dollar denominated investments in Nigeria

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Ø  Eurobond investment

If you are buying Eurobonds in Nigeria, you must buy in dollar which also the principal repayment and interest comes back to you in dollar.

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To till the ground further, Eurobonds have no condition to be necessarily in euro as most intending investors perceive.

Understanding the concept bonds

Bonds are fixed income instruments issued by entities to raise funds just like shares. The bonds are however backed by the full faith and credit of the Federal Government of Nigeria. Income earned on FGN Bonds is as well tax free.

Why invest in Eurobonds

Bonds provide a significant opportunity to the investors in the following ways

Ø  It’s a means of diversification – Like you are aware, there comes a time in your financial life you have to separate your investments. Bonds help you to keep your money aside away from the pool just in case casualty occurs. Bonds can preserve capital by reducing volatility.

Ø  Bonds keep your capital intact – This means to say, that bonds preserve your capital. In case you have a future budget, bonds ensures that you have access to your capital at maturity so as to undertake such expenses.

Ø  Bonds are tax free – Bond is not a type of investment in which you’re being taxed on earning your income. The whole profit/interest is entirely yours, does not require a third party to meddle with it.

Ø  Bonds are source of income – Having invested your money on bonds, interest and accrued profit will be received, which ultimately adds to your income pool.

Ø  Since Eurobond is denominated in foreign currency e.g Dollar, it has the ability to retain value against naira. It means that should naira depreciates as often, your money will be safe from devaluation.

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How to invest in Eurobonds in Nigeria

You can buy Eurobonds from the primary or secondary market like the federal government bonds. You simply do this by completing the Federal government bond form, then submit through any authorized dealers (broker or bank) as well make payment appropriately when required. After bids have been confirmed successful, your order will be placed.

In the process of Eurobonds investment, you should guard your risk appetite to ensure you do not go overboard with your money, investing for the sake of it could get your fingers burnt like any other investment.

You may have to seek proper investment advice, you may have to consider the credit ratings of Eurobonds prior your investment, a good broker performs advisory role.

On the purchasing platform, your may have to consider the banks or brokers assigned primarily to sell Eurobonds, these are possible authorized dealers. Do however consider their operational strengths and weakness.

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Eurobonds investment is one of the best investments you can ever bet your money on any day, just ensure you have the requisite education and information to guide you en-route to investment. The integrity of the authorized dealers and service as well should be prioritized, with this in place you are good to go.

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