Nigeria Reopens N350bn Bond Auction to Tackle Budget Deficit
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Nigeria’s Debt Management Office (DMO) has announced the reissuance of N350bn worth of Federal Government Savings Bonds this February, as the country looks to bridge its 2025 budget deficit and finance critical infrastructure projects.
According to the offer circular released by the DMO, the bonds were made available for subscription by auction on Monday. The latest offering includes N200bn for the 19.30% FGN APR 2029 bonds and N150bn for the seven-year tenor FGN FEB 2031 bonds, carrying a coupon rate of 18.50%. The settlement date for the auction is set for Wednesday.
Investor Appetite Remains Strong
The reissuance follows a highly successful January auction, where the DMO raised N669.94bn—well above the initial N450bn target. Investors showed robust demand across the three bond tenors offered, with N606.46bn allotted to FGN APR 2029, FGN FEB 2031, and FGN JAN 2035 bonds. The oversubscription reflected a competitive appetite for yields that align with current market conditions.
By reopening these bonds, the government aims to offer investors another chance to engage with federal securities while generating funds to support national development goals.
Market Response and Expectations
The bond auction has become a focal point for investors this week. According to Comercio Partners, the Federal Government Bonds Market started last week on a moderately active note, with trades on the 29s and 35s at 20.70% and 21.55%, respectively. The 33s were quoted at 20.40/20.20.
Bullish sentiments intensified following the Monetary Policy Committee (MPC) meeting, which maintained all policy parameters. This, combined with the DMO’s bond offer circular, drove trades on the 31s, 34s, and 35s down to 19.90%, 18.80%, and 18.00%, respectively.
Comercio Partners reported a week-on-week decline in the average benchmark yield by 66 basis points, closing at 19.08%.
Cowry Assets Management also noted the bullish trend, highlighting “strong investor confidence” and the appeal of high yields. “The high-yield environment and expectations of attractive rates at the upcoming FGN Bonds auction fuelled demand, particularly for short- and mid-term instruments,” the firm stated.
The research indicated strong buying interest in the 2035s, 2027s, 2039s, and JUL-30 bonds, leading to a drop in the average yield by 78 basis points to 19.47%.
Analysts Eye Positive Market Trajectory
Market analysts are optimistic about the fixed-income market’s trajectory, anticipating sustained investor participation due to attractive yields. They expect attention to remain on the DMO’s offering of N350bn at this month’s auction, split between N200bn for the April 2029 maturity and N150bn for the February 2031 maturity.
“Looking ahead, we anticipate a relatively positive trajectory in the fixed-income market, with attractive yields sustaining investor participation in the secondary market,” analysts said.
The latest bond auction is a crucial part of the government’s strategy to manage fiscal shortfalls while maintaining a stable and attractive investment environment. With both domestic and foreign borrowings on the agenda, the outcome of this auction could play a pivotal role in shaping Nigeria’s economic prospects for 2025 and beyond.
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