Nigeria Raises N1.94tn from Bond Investors in Q1 2025

The Federal Government secured a total of N1.94tn from bond investors in the first quarter of 2025, based on bond auction data released by the Debt Management Office (DMO).

This amount was raised through Federal Government of Nigeria (FGN) bonds over three months, excluding funds obtained via the FGN savings bond programme.

Initially, the government planned to raise N1.10tn through bond offerings but ultimately allotted N1.94tn due to strong investor interest, which drove total subscriptions to N2.83tn.

Breakdown of Bond Auctions

In January, the government offered N450bn across three bond instruments: the 5-year 19.30 per cent FGN APR 2029, the 7-year 18.50 per cent FGN FEB 2031, and a newly introduced 10-year 22.60 per cent FGN JAN 2035 bond. Investors submitted bids totaling N669.94bn, with N601.04bn eventually allotted. Notably, all funds were raised through competitive bidding.

By February, the government offered N350bn in bonds split between the 5-year and 7-year tenors. Investor demand surged to N1.63tn, significantly exceeding the offer. Despite this, the DMO took a cautious approach, allotting N910.39bn.

March saw a N300bn offering for two bonds: a re-issuance of the 5-year 19.30 per cent FGN APR 2029 and a 9-year 19.89 per cent FGN MAY 2033. The total subscription reached N530.31bn, with the government allotting N423.68bn—N271.23bn through competitive bids and N152.45bn via non-competitive allotments. The significant level of non-competitive allotments suggests strong participation from institutional investors such as pension funds.

Comparison to Previous Year

Overall, the Federal Government offered N1.10tn in FGN bonds in Q1 2025, attracting N2.83tn in subscriptions and allotting N1.94tn. This means over 70 per cent of total subscriptions were accepted, a decrease from Q1 2024, when the DMO accepted 80.8 per cent of subscriptions, raising N2.52tn out of N3.12tn subscribed. However, the 2024 figures were based on a much larger bond issuance of N3.31tn.

Read Also:

• FG Offers N450 Billion in FGN Bonds for Subscription
• Nigeria to Raise N350 Billion in February 2025 Bond Auction

A year-on-year comparison shows that Q1 2025 saw lower borrowings than Q1 2024, reflecting a more restrained borrowing strategy likely influenced by rising interest rates. The 2024 period featured larger bond offerings, particularly in February, when the government offered N2.5tn.

Market Trends and Interest Rates

The marginal rates for bonds in Q1 2025 indicated market adjustments. In January, marginal rates ranged from 21.79 per cent to 22.60 per cent, a sharp rise from January 2024’s range of 15.00 to 16.50 per cent. By March 2025, rates eased slightly to between 19.00 and 19.99 per cent, suggesting potential stabilization in interest rate expectations or improved investor confidence in economic management.

The 7-year and 10-year bonds attracted the highest demand in both years, highlighting institutional investors’ preference for medium- to long-term risk-free assets. These bonds are typically favored by pension fund administrators and insurance firms due to their alignment with long-term liabilities.

Debt Strategy and Economic Outlook

The DMO’s approach in 2025 indicates a shift toward issuing fewer bond instruments per auction while maximizing funds raised per bond. Instead of introducing multiple new bonds, the government focused on enhancing liquidity in existing instruments through re-openings and maintaining benchmark bonds at key maturities. This strategy supports price discovery in the secondary market and simplifies debt management.

Although the FGN savings bond programme also contributes to government borrowing, the figures presented here reflect only proceeds from the FGN bond auctions, which primarily target institutional and high-net-worth investors.

Additionally, the Federal Government expanded its bond listings by adding 910.3 million units of its existing February 2025 bonds on the Nigerian Exchange Limited. The supplementary listing included 305.36 million units of the 19.30 per cent FGN APR 2029 bond and 605.03 million units of the 18.50 per cent FGN FEB 2031 bond.

FGN bonds serve as debt securities issued by the government to raise capital for infrastructure and other developmental projects. With the new issuance, the total outstanding units for the 19.30 per cent FGN APR 2029 bond increased from 463.16 million to 768.52 million, while the 18.50 per cent FGN FEB 2031 bond grew from 2.1 billion to 2.71 billion units.

Financial analysts have emphasized the need for prudent debt management to prevent fiscal strain. While the International Monetary Fund (IMF) recently assessed Nigeria’s debt level as moderate rather than high-risk, it advised against excessive borrowing. The IMF highlighted the importance of reducing dependence on debt by implementing prudent spending, improving tax collection, and efficiently allocating budgets to foster economic growth.