Nigeria Raises N7.62trn from Bonds in 8 Months
Debt Management Office (DMO) has raised N7.62 trillion via Federal Government of Nigeria (FGN) bonds across 8 primary market auctions conducted from the beginning of the year to date.
The local debt market has contributed significantly to financing the Nigerian government’s budget deficit of about N31.5 trillion. Due to tight returns on the debt papers, the authority auction records showed tight subscriptions across year-to-date auctions compared with Treasury bills.
Higher spot rates on Nigerian Treasury bills continue to influence buying activity, leaving the yield curve inverted, with short-term instruments earning more than longer-duration instruments.
At the August FGN Bonds auction last week, the DMO allotted N805.2 billion to fixed-income investors across the January 2035, April 2037, and June 2038 maturities.
Although competitive allotments fell short of the N1.1 trillion on offer, total sales rose to nearly N1.6 trillion after accounting for N752.3bn in non-competitive allotments, Cowry Asset Management Limited said in a note.
Traders noted that investor appetite remained strong, with total subscriptions of N1.7 trillion translating to a bid-to-cover ratio of 2.1x, up from 1.9x at the previous auction.
The auction results suggested the market experienced a relatively low competitive allotment, driven more by the DMO’s yield considerations than by weak demand.
Demand was particularly concentrated on the June 2038 bond, which attracted N821.3 billion in bids against competitive sales of N631.0 billion, alongside N742.3 billion in non-competitive allotments.
The DMO’s cautious approach to pricing was reflected in the marginal yield of 17.79 for the Jun-38, Cowry Asset Management told investors in a note.
The firm said this was even more evident on the January 2035 bond, where subscriptions reached N513.6 billion, but only N64.1 billion was allotted competitively, despite a marginal yield of 17.15%.
The strong demand suggests that investors are increasingly positioning for a potential moderation in bond yields as inflation continues to ease and expectations of sustained disinflation strengthen.
Year-to-date, the DMO has raised nearly N7.62tn through bond auctions, excluding proceeds from Treasury bills and other instruments such as Sukuk, highlighting the continued reliance on domestic capital markets to finance government expenditure. Treasury Bills Yield Rises to 19.5% Ahead of Q2 Supply

