DMO Raises N2trn from Bonds to Fund Nigeria’s Budget Deficit
Nigeria’s Debt Management Office (DMO) raised N2 trillion from reopened government bonds across three tenors at the October main auction and through competitive bids, the auction results revealed.
The debt agency auctioned reopened bonds totalling N1.75 trillion last week, reflecting increased domestic funding needs, according to fixed-income market analysts. This amount excludes non-competitive sales.
Experts observed a notable surge in bond supply for Q4, with total allotments pointing to the authority’s determined push to bridge a major funding gap.
The DMO offered about N1.8 trillion across the February 2034, September 2036, and June 2038 bonds, up from N1 trillion in September, according to Cowry Asset Management Limited.
Total subscriptions climbed to N1.7 trillion from N1.5 trillion at the previous auction. Yet, the bid-to-offer ratio slipped to 1.0x from 1.5x, suggesting investor appetite lagged behind the expanded offer, the firm said.
The DMO awarded N1.2 trillion to competitive bidders, up from N749 billion in September, underscoring the broadened issuance drive and ongoing investor engagement.
Cowry Asset noted that non-competitive allotments remain a key funding channel, allowing the government to raise additional funds beyond those allocated through competitive auctions.
The DMO raised an additional N800 billion through non-competitive allotments in October, compared to N850 billion in September, bringing total funds raised to N2 trillion from N1.6 trillion.
“While we think this approach supports the government’s domestic borrowing programme, the increased volume of issuance also raises the potential for sustained upward pressure on borrowing costs as investors reassess the returns required to absorb additional government debt.”
In line with expectations of higher yields amid elevated funding requirements, clearing rates increased across all three maturities.
The February 2034 bond cleared at 16.99%, up from 15.50% at its previous issuance, while the September 2036 and June 2038 bonds rose 50bps and 34bps to 17.29% and 17.19%, respectively.
Cowry Asset Management Limited told investors that the repricing highlights the DMO’s need to offer more competitive yields to attract funds amid rising supply.
The resulting borrowing costs are likely to influence secondary-market valuations and investor allocation decisions across fixed-income instruments.
