The Federal Government raised a total of ₦1.94 trillion from bond investors in the first quarter of 2025, according to bond auction results released by the Debt Management Office (DMO). This amount was secured through Federal Government of Nigeria (FGN) bonds over three months and excludes borrowings from the FGN savings bond program.
The figure represents the total allotments to investors who participated in the monthly FGN bond auctions for January, February, and March 2025. Initially, the government had planned to raise ₦1.10 trillion but ended up allotting ₦1.94 trillion due to strong investor interest, which pushed total subscriptions to ₦2.83 trillion.
Breakdown of Bond Auctions in Q1 2025
In January, the government offered ₦450 billion across three instruments:
- 5-year 19.30% FGN APR 2029
- 7-year 18.50% FGN FEB 2031
- Newly introduced 10-year 22.60% FGN JAN 2035 bond
Investors submitted bids totaling ₦669.94 billion, and the government allotted ₦601.04 billion. There was no non-competitive allotment in January, meaning all allotments were based on competitive bidding. In comparison, January 2024 saw an offer of ₦360 billion with ₦604.56 billion in subscriptions and ₦418.2 billion allotted.
By February 2025, the government offered ₦350 billion between the 5-year and 7-year bonds. Demand surged to ₦1.63 trillion, far exceeding the offer. The DMO allotted ₦910.39 billion, exercising caution despite the high demand. This was a significant drop compared to February 2024, when ₦2.5 trillion was offered, ₦1.90 trillion was subscribed, and ₦1.495 trillion was allotted across two bonds.
March 2025 saw an offer of ₦300 billion for two bonds:
- Re-opening of the 5-year 19.30% FGN APR 2029
- 9-year 19.89% FGN MAY 2033
Subscriptions reached ₦530.31 billion, with ₦423.68 billion allotted—₦271.23 billion through competitive bids and ₦152.45 billion via non-competitive allotments. The high level of non-competitive allotments suggests strong interest from institutional investors such as pension funds.
In comparison, March 2024 had an offer of ₦450 billion, subscriptions of ₦615.01 billion, and allotments of ₦475.66 billion, including ₦133.2 billion in non-competitive allotments.
Year-on-Year Comparison
In total, the Federal Government offered ₦1.10 trillion in FGN bonds in Q1 2025, received ₦2.83 trillion in subscriptions, and allotted ₦1.94 trillion. This means over 70% of total subscriptions were accepted, compared to 80.8% in Q1 2024 when the DMO allotted ₦2.52 trillion out of ₦3.12 trillion in subscriptions. However, the Q1 2024 figure was based on a much higher total offer of ₦3.31 trillion.
The ₦1.94 trillion raised in Q1 2025 is lower than the ₦2.52 trillion raised in Q1 2024, reflecting a more restrained borrowing strategy amid high interest rates. While offers in Q1 2024 totaled ₦3.31 trillion—driven by a massive ₦2.5 trillion offer in February—the 2025 figure was significantly lower at ₦1.10 trillion. This suggests a deliberate effort to moderate domestic borrowing despite strong investor demand.
Market Trends and Interest Rate Adjustments
Marginal rates in Q1 2025 reflect market adjustments:
- January 2025: Marginal rates ranged from 21.79% to 22.60%, up from 15.00% to 16.50% in January 2024.
- March 2025: Rates eased slightly to 19.00% to 19.99%, indicating potential stabilization in interest rate expectations and renewed investor confidence.
Institutional investors continued to show a preference for medium- to long-term bonds, particularly the 7-year and 10-year instruments, which align with pension funds and insurance firms’ long-term liabilities.
Strategic Shifts in Bond Issuance
The DMO’s 2025 auction strategy shows a shift toward issuing fewer instruments per auction while raising more from each bond. Instead of offering a wide array of maturities, the government focused on re-opening existing instruments and maintaining benchmark bonds across key tenors. This approach supports price discovery in the secondary market and simplifies debt management.
While the FGN savings bond program contributes to government borrowing, this report focuses on proceeds from the FGN bond program, which targets institutional and high-net-worth investors through monthly auctions.
Expanding Bond Listings
The Federal Government recently expanded its bond listings with an additional 910.3 million units of existing February 2025 bonds on the Nigerian Exchange Limited (NGX). The supplementary listing includes:
- 305.36 million units of the 19.30% FGN APR 2029 bond
- 605.03 million units of the 18.50% FGN FEB 2031 bond
FGN bonds serve as key instruments for raising capital for infrastructure projects and economic development.
Debt Sustainability and Market Outlook
Nigeria’s rising debt profile has sparked discussions about fiscal sustainability. Investment firm Afrinvest recently emphasized the need for urgent action to manage the country’s debt burden. However, during a recent visit, IMF First Deputy Managing Director Gita Gopinath offered a more moderate assessment, stating that Nigeria’s sovereign debt stress remains at a “moderate” risk level rather than high risk.
Gopinath noted, “Our assessment for 2024 indicated that Nigeria’s risk of sovereign stress is moderate, not high.” However, she cautioned that this should not be seen as a green light for excessive borrowing.
The Federal Government’s borrowing strategy in 2025 appears more cautious, reflecting the impact of high interest rates and a focus on optimizing debt management amid ongoing fiscal challenges.
