The Federal Government of Nigeria’s bond auction for February 2025 witnessed a remarkable surge in investor interest, with total subscriptions reaching N1.63 trillion. This represents a significant increase from the N670.94 billion recorded in January, signaling growing confidence in the nation’s debt market.
The Debt Management Office (DMO), which conducted the auction on February 24, disclosed the results on its official website. The auction involved the reopening of two bond instruments: the 19.30% Federal Government of Nigeria (FGN) APR 2029 (five-year bond) and the 18.50% FGN FEB 2031 (seven-year bond). Notably, the February auction did not include the 10-year bond, which had been part of the January offering.
Initially, the DMO offered a total of N350 billion, with N200 billion allocated to the five-year bond and N150 billion to the seven-year bond. However, due to heightened investor demand, the total allotment soared to N910.39 billion, surpassing both the initial offer and the total allotment for January.
In January, the government had offered N450 billion across three bond tenors—five-year, seven-year, and 10-year—but ultimately allotted N601.04 billion. The breakdown for January showed N78.86 billion allotted for the five-year bond, N153.87 billion for the seven-year bond, and N368.31 billion for the 10-year bond.
By comparison, the February auction, despite its lower initial offer of N350 billion, saw a 51.5% increase in total allotment compared to January. The five-year bond’s allotment rose to N305.36 billion, nearly four times the January figure, while the seven-year bond’s allotment surged to N605.03 billion, almost quadrupling its January level.
The absence of the 10-year bond in February likely contributed to the increased demand for the shorter-tenor instruments, as investors redirected their funds. Additionally, yields on the bonds declined significantly, reflecting stronger investor confidence. In January, the five-year bond was auctioned at a marginal rate of 21.79%, while the seven-year bond had a marginal rate of 22.50%. By February, these rates had dropped to 19.20% and 19.33%, respectively, marking a decline of over 250 basis points for both instruments.
The falling yields suggest that investors are increasingly comfortable with lower returns, potentially due to expectations of a more stable interest rate environment and moderating inflation. The increased demand and lower yields also point to improved market liquidity, as institutional investors, including pension funds and asset managers, appear to have had ample cash to deploy into government securities.
This surge in subscriptions and the decline in yields underscore the growing confidence in Nigeria’s debt market, as investors continue to seek safer and more stable investment opportunities amidst evolving economic conditions.
