In a continued push to attract domestic investors and deepen the fixed-income market, Nigeria’s Debt Management Office (DMO) successfully raised a total of N397.9 billion in its April 2025 bond auction.
The funds were mobilized through two re-issued Federal Government of Nigeria (FGN) bonds with maturities set for April 2029 and May 2033, both offering highly competitive interest rates to investors.
The auction took place on April 28, 2025, with settlement scheduled for April 30, 2025. According to official data from the DMO, investor participation displayed a noticeable tilt toward longer-tenure instruments, signaling evolving sentiment in Nigeria’s local debt market.
What Was on Offer?
The two instruments on offer were:
- A 5-year FGN bond maturing in April 2029 with a coupon rate of 19.30%
- A 9-year FGN bond maturing in May 2033 with a higher coupon rate of 19.89%
While the shorter 2029 bond saw lukewarm interest, the longer 2033 bond attracted significant attention, reflecting investor confidence in long-term government debt and their appetite for consistent, high-yield returns.
A Tale of Two Bonds: Demand Breakdown
The 2033 bond emerged as the star of the auction. Despite an initial offer size of N150 billion, it received total bids worth over N452.16 billion, indicating a substantial oversubscription. This enthusiasm led to a competitive allotment of N376.77 billion, with an additional N73 billion awarded via non-competitive bids. In total, the DMO allotted N449.77 billion for the 2033 instrument, three times the original offer amount.
In contrast, the 2029 bond experienced limited traction. Out of a N200 billion offer, it only drew N43.79 billion in bids. Ultimately, the DMO allotted N21.13 billion competitively and an additional N50 billion via non-competitive allotments, totaling N71.13 billion.
Yields and Returns
Despite the market clearing at slightly different marginal rates—19.00% for the 2029 bond and 19.99% for the 2033 bond—the original coupon rates will still apply. This means investors will continue to enjoy 19.30% and 19.89% interest on the 2029 and 2033 bonds respectively, aligning with the government’s strategy to reward long-term savings with attractive returns.
Why Investors Are Flocking to Longer Bonds
Analysts believe the strong preference for the 9-year bond is influenced by broader macroeconomic expectations. With Nigeria’s inflationary trends and the potential for future monetary policy easing, long-dated bonds are increasingly seen as effective hedges. Investors are looking to lock in high yields now before any rate cuts emerge down the line.
The auction also reflects a shift in investor behavior, favoring stability, predictable returns, and long-term value in a climate still marked by global and local economic uncertainties.
The DMO’s successful April 2025 auction underscores the continued relevance of government securities in Nigeria’s domestic finance strategy. By offering compelling yields, especially on longer-dated instruments, the federal government is not only meeting its financing needs but also fostering a more robust savings and investment culture among Nigerians.
As Nigeria’s debt market continues to mature, such oversubscriptions—especially on long-term instruments—highlight a deepening confidence in public debt as a viable asset class for both institutional and retail investors.
