A bond represents a long-term financial obligation (debt) of an entity. It is a debt investment in which an investor loans funds to the entity who borrows the funds for a defined period of time at a variable or fixed interest rate. The borrower commits to pay a specified sum of money periodically (coupon) as well as repay the principal at stipulated future dates.

Bonds are usually issued to finance budget deficits, fund specific projects or recapitalise an entity through various processes such as Competitive Bidding (Auction), Price Discovery (Book Build), Syndication or Private Placements. Typical issuers of bonds include: Sovereign/State/Local Governments, Agencies, Corporates, Supra-nationals etc.

The following bonds, denominated in both local and foreign currencies, are listed on FMDQ OTC Securities Exchange:

Sovereign Bonds

These are long-term debt securities issued by the Federal Government of Nigeria through the Debt Management Office, used to support government spending. Government bonds are generally regarded as the safest bond investments since they are backed by the government of a nation and therefore have the highest credit rating in the government’s nation.

Agency Bonds

These are bonds issued by a government-sponsored agency, backed by the government of the country. Such agencies are usually set up to allow access to low cost of financing for certain areas in the economy e.g. housing, power, transport, etc.

Corporate Bonds

These are long-term debt securities issued by corporations in order to raise finance for a variety of reasons, from building facilities and purchasing equipment to expanding their businesses. Corporate bonds are usually characterised by higher yields than government bonds because there is a higher risk of a company defaulting than a government. They, however, can also be the most rewarding fixed-income investments because of the risk the investors must take on. A corporation’s credit quality is very important as the higher the quality, the lower the interest rate the investors receive.

Supranational Bonds

Supranational entities are formed by two or more central governments with the purpose of promoting economic development for the member nations. Supranational bonds are debt securities issued by these institutions to finance their activities. Similar to government bonds, supranational bonds are regarded as very safe and have high credit ratings. Examples of Supranationals include the International Finance Corporation, the African Development Bank, the World Bank Group and the United Nations.

Sub-national Bonds

These are long-term debt securities issued by the state and local governments of a nation to finance projects for the public good like building schools, roads, hospitals and sewer systems.


These are bonds issued in currencies other than the domestic currencies of the issuing entities. Eurobonds are attractive financing tools as they give issuers the flexibility to choose the countries in which to offer their bonds determined by the countries’ regulatory constraints.

Short-Term Bonds

Recently introduced to the debt capital market by FMDQ, these are debt securities issued by non-sovereign entities, for tenors between one year and not exceeding three years. These bonds close the current funding gap between short-term money market securities such as commercial papers and the traditional medium- to long-term debt capital securities. For investors, these bonds present a higher yielding alternative to short-term money market securities.


Often referred to as “sharia-compliant” bonds, Sukuk are bonds structured to comply with Islamic law, prohibiting payment of interest on borrowed amounts. Sukuk debt instruments grant investors shares in an asset alongside assumption of commensurate profit and risk. Sukuk are issued through various structures which provide fixed or floating rate payments.