The Federal Government, through the Debt Management Office (DMO), plans to raise a total of N300 billion from the domestic bond market in May 2025.
This is a 12.5% drop from the N350 billion offered in April 2025, signalling a modest shift in borrowing needs.
According to the May 2025 bond offer circular seen by Nairametrics on Thursday, the DMO is offering N100 billion worth of the 19.30% FGN APR 2029 (a 5-year bond re-opening) and N200 billion of the 19.89% FGN MAY 2033 (a 9-year bond re-opening).
The auction will be held on May 26, with settlement slated for May 28, 2025.
Shorter tenor down, longer tenor up
In contrast, the April 2025 auction featured a N200 billion offer for the same 5-year bond and N150 billion for the 9-year bond, amounting to a total of 350 billion.
The offer for the APR 2029 bond has been slashed by half, from N200 billion in April to N100 billion in May. Meanwhile, the MAY 2033 bond offer was increased by 33.3%, from N150 billion to N200 billion.
Both bonds are re-openings of previously issued instruments, meaning the coupon rates are fixed at 19.30% and 19.89% respectively, with auction participants bidding based on their preferred yield-to-maturity. The DMO will allot the bonds at clearing rates, factoring in accrued interest as applicable.
The decision to scale down the shorter-dated bond offering while boosting the longer tenor aligns with government efforts to extend its debt maturity profile. This strategy can reduce rollover risks and better align debt servicing with long-term fiscal planning.
What you should know
The May auction continues the DMO’s monthly bond issuance calendar, which plays a crucial role in financing Nigeria’s fiscal deficit and managing debt sustainability.
- With interest rates at elevated levels and inflation still a key concern, investor appetite has remained relatively strong, particularly among pension funds, banks, and insurance firms seeking high-yielding, tax-exempt instruments.
- The DMO allotted a total of N397.898 billion across two re-opening issues: the 19.30% FGN APR 2029 (5-Year Bond) and the 19.89% FGN MAY 2033 (9-Year Bond).
- The 5-year FGN Bond, offered at a coupon rate of 19.30%, recorded a total allotment of N21.127 billion across 13 successful subscriptions.
- The 9-year FGN Bond, which carries a higher yield of 19.89%, garnered stronger interest, with a total allotment of N376.771 billion from 137 successful subscriptions.
All FGN bonds qualify as liquid assets for regulatory liquidity ratios and are listed on the Nigerian Exchange and FMDQ OTC Securities Exchange. This enhances tradability and attractiveness for institutional investors.
In its last few auctions, the DMO has witnessed significant oversubscription, suggesting that the May 2025 issuance is likely to attract robust demand despite the slight reduction in total offer size.
The bond market remains a critical funding channel for the government as it balances competing priorities of economic stimulus, debt sustainability, and investor confidence.
