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The short answer
You buy a Nigerian corporate bond at issue through the issuing house or a stockbroker, or later on the secondary market through a broker or dealer. Before you buy, check the credit rating, who the trustee is, the coupon and how it is paid, whether the bond is secured and the issuer's finances. Unlike FGN bonds, corporate bond interest is not tax-exempt.
Corporate bonds let you lend to a company for several years in return for a fixed coupon. In Nigeria they are issued by banks, manufacturers, telecoms and infrastructure firms, and they usually pay more than FGN bonds of similar length. The extra yield is payment for risk. This guide explains how to buy one and the checks that matter most. For how bonds work in general, see how FGN bonds work, as the mechanics are similar.
Ways to buy
- At issue. New corporate bonds are usually sold through a book build or offer managed by an issuing house. You apply through the issuing house, a receiving bank or your stockbroker during the offer period. Minimums are set in the prospectus and are often high.
- On the secondary market. Many corporate bonds are quoted on FMDQ, some also on NGX. A broker or dealer can buy existing bonds for you, often in smaller amounts.
- Through a fund. Bond funds and some money market funds hold corporate debt and spread the risk across issuers.
Check any broker, issuing house or fund manager on the SEC's register of operators before you pay.
What to check in the prospectus
1. The credit rating
A rating from a registered agency is the quickest guide to default risk. Read the rating report, not just the letter: it explains the issuer's strengths, weaknesses and outlook. Note the date. A rating can be lowered after you buy.
2. The trustee
Every corporate bond has a trustee, a regulated firm that acts for bondholders. If the issuer misses a payment or breaks a promise in the trust deed, the trustee can call bondholders together and enforce their rights. Find out who the trustee is and what the trust deed lets it do.
3. The coupon and payment dates
Most corporate bonds pay a fixed coupon twice a year, like FGN bonds, but some pay quarterly or have floating rates. Note the coupon dates, the day count and whether principal is repaid at the end or in instalments (amortising).
4. Security and ranking
A secured bond is backed by specific assets or a sinking fund. An unsecured bond ranks with other unsecured creditors. Some bonds are subordinated, which means they are paid after senior debt if the company fails. Subordinated bonds pay more because they carry more risk.
5. Call and other options
A callable bond lets the issuer repay early, often when rates fall. You then have to reinvest at lower rates. Check for call dates and prices.
6. The issuer's finances
The rating is a summary; the financial statements are the evidence. Look at how much debt the company carries against its earnings, whether its revenue is in naira or dollars, and whether it has large debts due before your bond matures. A company that earns in naira but owes dollars is exposed when the naira weakens.
Default risk in practice
If an issuer cannot pay, the trustee steps in, and bondholders may agree to a restructuring: later repayment, a lower coupon or both. Recovery can take years. That is why many savers limit corporate bonds to a share of their savings and spread across issuers and sectors.
Tax
Keep the coupon credit advice or statement for every payment, since that is your record of what was deducted. Corporate bond interest does not share the FGN bond exemption. An October 2025 tax directive named corporate bonds among the instruments whose interest faces 10% withholding tax, while interest on Federal Government bonds stays exempt. Compare after tax: in the example above, a 10% deduction on a 19% coupon leaves 17.1%, which narrows the gap with the tax-exempt FGN bond to just over one point. See are FGN bond coupons taxed.
Steps
- Pick a regulated broker or bank and open an account (BVN, ID, CSCS for NGX-listed bonds).
- Get the prospectus or pricing supplement and the rating report.
- Note trustee, coupon, dates, security, ranking and call features.
- Compare the after-tax yield with an FGN bond of similar maturity.
- Buy, then check your holding statement and coupon bank details.
Where Pryme fits
Pryme does not sell bonds. Coupons can be paid into a Pryme account, and a verifiable statement made through VerifyDoc.ai (receipts and statements) gives you a clean record for tax.
Questions people ask
How do I buy corporate bonds in Nigeria?
Through the issuing house or your stockbroker when a new bond is offered, or later through a broker or dealer on FMDQ or NGX.
Are corporate bonds safe in Nigeria?
They carry the risk that the company cannot pay. Check the rating, security, trustee and the issuer's finances before you buy.
Are corporate bond coupons taxed in Nigeria?
Yes. The October 2025 directive named corporate bonds among instruments whose interest faces 10% withholding tax.
What does a bond trustee do?
It acts for bondholders, monitors the issuer's promises and can enforce their rights if the issuer defaults.
Sources
- Bizcommunity (Reuters): Nigeria to impose 10% withholding tax on interest on short-term securities (29 Oct 2025) · accessed Oct 2026
- SEC Nigeria: Find a registered operator · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria guidance on withholding tax on interest from short-term securities (4 Dec 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.