How FG Borrowed N1.94trn From Bond Buyers

The Federal Authorities borrowed a complete of N1.94trn from bond traders within the first quarter of 2025, an evaluation of bond public sale outcomes launched by the Debt Administration Workplace (DMO) confirmed.

Nevertheless, the quantity was raised via Federal Authorities of Nigeria bonds over the three months and doesn’t embrace borrowings via the FGN financial savings bond programme.

The determine represents the whole quantity allotted to traders who participated within the month-to-month FGN bond auctions for January, February and March 2025.

Financial Confidential noticed that the federal government had initially provided N1.10tn in bonds over the quarter however ended up allotting N1.94tn, following robust investor curiosity that pushed complete subscriptions to N2.83tn.

The January public sale noticed the federal government provide N450bn throughout three devices: the 5-year 19.30 per cent FGN APR 2029, the 7-year 18.50 per cent FGN FEB 2031, and a newly launched 10-year 22.60 per cent FGN JAN 2035 bond.

Buyers responded with bids totalling N669.94bn, and the federal government allotted N601.04bn.

There was no non-competitive allotment in January, indicating that the whole quantity was taken via aggressive bidding. In January 2024, the federal government provided N360bn and obtained N604.56bn in subscriptions, with N418.2bn finally allotted.

By February 2025, the federal government provided N350bn, divided between the 5-year and 7-year bonds. Demand surged to N1.63tn, far outstripping the provide.

The DMO allotted N910.39bn, sustaining a cautious strategy regardless of the large demand. This was a step down from February 2024, when the DMO had provided N2.5tn in bonds and allotted N1.495tn. February 2024 noticed the best exercise, with N2.5tn on provide and N1.90tn subscribed. The DMO allotted N1.495tn throughout two bonds: the 7-year 18.50 per cent FGN FEB 2031 and the 10-year 19.00 per FGN FEB 2034.

March 2025 recorded a suggestion of N300bn for 2 bonds — a re-opening of the 5-year 19.30 per cent FGN APR 2029 and a 9-year 19.89 per cent FGN MAY 2033.

Subscription stood at N530.31bn, and the federal government allotted N423.68bn. This comprised N271.23bn in aggressive bids and N152.45bn in non-competitive allotments.

The excessive degree of non-competitive allotment in March suggests vital curiosity from institutional traders, resembling pension funds, which usually make investments via this window.

In March 2024, the provide stood at N450bn, and subscriptions reached N615.01bn, with allotments totalling N475.66bn — together with N133.2bn in non-competitive allotments.

In complete, the Federal Authorities provided N1.10tn in FGN bonds in Q1 2025, obtained N2.83tn in subscriptions, and allotted N1.94tn.

Which means greater than 70 per cent of complete subscriptions had been accepted — a notable enhance in comparison with Q1 2024, when the DMO accepted 80.8 per cent of subscriptions (N2.52tn out of N3.12tn).

Nevertheless, it’s necessary to notice that the Q1 2024 determine was based mostly on a a lot larger complete provide of N3.31tn.

A year-on-year breakdown reveals that the N1.94tn raised in Q1 2025 is decrease than the N2.52tn raised in Q1 2024, however the authorities adopted a extra restrained borrowing technique in 2025, which is probably going because of the excessive rates of interest.

Whereas presents in Q1 2024 totalled N3.31tn — largely due to an enormous N2.5tn provide in February alone — the 2025 determine was considerably decrease at N1.10tn.

This implies that the federal government has moderated its home borrowing tempo, whilst market curiosity stays excessive. The drop in provide quantity in 2025 was matched by a extra conservative strategy to allotments regardless of the continued oversubscription development.

The marginal charges throughout bonds in Q1 2025 additionally revealed a market adjustment. In January 2025, marginal charges ranged from 21.79 per cent to 22.60 per cent, a pointy enhance from January 2024’s 15.00 to 16.50 per cent vary.

By March 2025, marginal charges had eased barely to between 19.00 and 19.99 per cent, suggesting a attainable stabilisation in rate of interest expectations or a return of investor confidence in macroeconomic administration.

The 7-year and 10-year bonds continued to draw the strongest demand throughout each years, indicating a desire by institutional traders for medium- to long-term risk-free belongings.

These bonds are usually favoured by pension fund directors and insurance coverage corporations on account of their matching length with long-term liabilities.

The DMO’s bond public sale technique in 2025 additionally reveals a shift in the direction of issuing fewer devices per public sale whereas elevating extra from every bond.

Quite than flooding the market with a big selection of maturities, the federal government targeted on deepening liquidity in present devices via re-openings and sustaining benchmark bonds throughout key tenors.

This not solely helps value discovery within the secondary market but in addition reduces the complexity of managing a fragmented debt profile.

Whereas the financial savings bond programme — aimed toward retail traders — additionally contributes to authorities borrowing, the figures reported right here solely mirror proceeds from the FGN bond programme, which is performed via month-to-month auctions focused at institutional and high-net-worth traders.

Financial Confidential earlier reported that the Federal Authorities of Nigeria expanded its bond listings with an extra 910.3 million models of its present February 2025 bonds on the Nigerian Change Restricted.

An announcement by NGX disclosed that the supplementary itemizing included 305.36 million models of the 19.30 per cent FGN APR 2029 bond and 605.03 million models of the 18.50 per cent FGN FEB 2031 bond.

FGN bonds are debt securities issued by the Federal Authorities to boost capital for infrastructure initiatives and different improvement initiatives.

With the brand new issuance, the whole excellent models for the 19.30 per cent FGN APR 2029 bond rose from 463.16 million to 768.52 million, whereas the 18.50 per cent FGN FEB 2031 bond elevated from 2.1 billion to 2.71 billion models.

Consultants at funding home Afrinvest not too long ago asserted that Nigeria’s debt profile requires rapid motion to forestall additional deterioration.

Nevertheless, throughout a latest nation go to, IMF’s First Deputy Managing Director, Gita Gopinath, famous Nigeria’s debt degree as average moderately than high-risk, providing a considerably optimistic evaluation of the nation’s fiscal place.

On Nigeria’s debt sustainability, Gopinath stated, “We (IMF) assess debt sustainability for nations yearly, and we did this for Nigeria in our report for 2024. Our evaluation was that the danger of sovereign stress for Nigeria is average and never excessive danger.”

She, nevertheless, warned that the IMF’s verdict was not a licence for the nation to tackle extra debt.

Reacting to the go to, specialists at Afrinvest, of their macroeconomic replace, aligned with the IMF’s view {that a} long-term technique ought to prioritise decreasing reliance on debt and strengthening Nigeria’s fiscal place via prudent spending, improved tax assortment, and environment friendly funds allocation, all throughout the framework of actual financial development.