How FG Borrowed N1.94trn From Bond Investors
The Federal Government borrowed a total of N1.94trn from bond investors in the first quarter of 2025, an analysis of bond auction results released by the Debt Management Office (DMO) showed.
However, the amount was raised through Federal Government of Nigeria bonds over the three months and does not include borrowings through the FGN savings bond programme.
The figure represents the total amount allotted to investors who participated in the monthly FGN bond auctions for January, February and March 2025.
Economic Confidential observed that the government had initially offered N1.10tn in bonds over the quarter but ended up allotting N1.94tn, following strong investor interest that pushed total subscriptions to N2.83tn.
The January auction saw the government offer N450bn across three instruments: the 5-year 19.30 per cent FGN APR 2029, the 7-year 18.50 per cent FGN FEB 2031, and a newly introduced 10-year 22.60 per cent FGN JAN 2035 bond.
Investors responded with bids totalling N669.94bn, and the government allotted N601.04bn.
There was no non-competitive allotment in January, indicating that the entire amount was taken through competitive bidding. In January 2024, the government offered N360bn and received N604.56bn in subscriptions, with N418.2bn eventually allotted.
By February 2025, the government offered N350bn, divided between the 5-year and 7-year bonds. Demand surged to N1.63tn, far outstripping the offer.
The DMO allotted N910.39bn, maintaining a cautious approach despite the huge demand. This was a step down from February 2024, when the DMO had offered N2.5tn in bonds and allotted N1.495tn. February 2024 saw the highest activity, with N2.5tn on offer and N1.90tn subscribed. The DMO allotted N1.495tn across two bonds: the 7-year 18.50 per cent FGN FEB 2031 and the 10-year 19.00 per FGN FEB 2034.
March 2025 recorded an offer of N300bn for two bonds — a re-opening of the 5-year 19.30 per cent FGN APR 2029 and a 9-year 19.89 per cent FGN MAY 2033.
Subscription stood at N530.31bn, and the government allotted N423.68bn. This comprised N271.23bn in competitive bids and N152.45bn in non-competitive allotments.
The high level of non-competitive allotment in March suggests significant interest from institutional investors, such as pension funds, which typically invest through this window.
In March 2024, the offer stood at N450bn, and subscriptions reached N615.01bn, with allotments totalling N475.66bn — including N133.2bn in non-competitive allotments.
In total, the Federal Government offered N1.10tn in FGN bonds in Q1 2025, received N2.83tn in subscriptions, and allotted N1.94tn.
This means that more than 70 per cent of total subscriptions were accepted — a notable increase compared to Q1 2024, when the DMO accepted 80.8 per cent of subscriptions (N2.52tn out of N3.12tn).
However, it’s important to note that the Q1 2024 figure was based on a much higher total offer of N3.31tn.
A year-on-year breakdown shows that the N1.94tn raised in Q1 2025 is lower than the N2.52tn raised in Q1 2024, but the government adopted a more restrained borrowing strategy in 2025, which is likely due to the high interest rates.
While offers in Q1 2024 totalled N3.31tn — largely due to a massive N2.5tn offer in February alone — the 2025 figure was significantly lower at N1.10tn.
This suggests that the government has moderated its domestic borrowing pace, even as market interest remains high. The drop in offer volume in 2025 was matched by a more conservative approach to allotments despite the continued oversubscription trend.
The marginal rates across bonds in Q1 2025 also revealed a market adjustment. In January 2025, marginal rates ranged from 21.79 per cent to 22.60 per cent, a sharp increase from January 2024’s 15.00 to 16.50 per cent range.
By March 2025, marginal rates had eased slightly to between 19.00 and 19.99 per cent, suggesting a possible stabilisation in interest rate expectations or a return of investor confidence in macroeconomic management.
The 7-year and 10-year bonds continued to attract the strongest demand across both years, indicating a preference by institutional investors for medium- to long-term risk-free assets.
These bonds are typically favoured by pension fund administrators and insurance firms due to their matching duration with long-term liabilities.
The DMO’s bond auction strategy in 2025 also shows a shift towards issuing fewer instruments per auction while raising more from each bond.
Rather than flooding the market with a wide array of maturities, the government focused on deepening liquidity in existing instruments through re-openings and maintaining benchmark bonds across key tenors.
This not only supports price discovery in the secondary market but also reduces the complexity of managing a fragmented debt profile.
While the savings bond programme — aimed at retail investors — also contributes to government borrowing, the figures reported here only reflect proceeds from the FGN bond programme, which is conducted through monthly auctions targeted at institutional and high-net-worth investors.
Economic Confidential earlier reported that the Federal Government of Nigeria expanded its bond listings with an additional 910.3 million units of its existing February 2025 bonds on the Nigerian Exchange Limited.
A statement by NGX disclosed that the supplementary listing included 305.36 million units of the 19.30 per cent FGN APR 2029 bond and 605.03 million units of the 18.50 per cent FGN FEB 2031 bond.
FGN bonds are debt securities issued by the Federal Government to raise capital for infrastructure projects and other development initiatives.
With the new issuance, the total outstanding units for the 19.30 per cent FGN APR 2029 bond rose from 463.16 million to 768.52 million, while the 18.50 per cent FGN FEB 2031 bond increased from 2.1 billion to 2.71 billion units.
Experts at investment house Afrinvest recently asserted that Nigeria’s debt profile requires immediate action to forestall further deterioration.
However, during a recent country visit, IMF’s First Deputy Managing Director, Gita Gopinath, noted Nigeria’s debt level as moderate rather than high-risk, offering a somewhat optimistic assessment of the country’s fiscal position.
On Nigeria’s debt sustainability, Gopinath said, “We (IMF) assess debt sustainability for countries every year, and we did this for Nigeria in our report for 2024. Our assessment was that the risk of sovereign stress for Nigeria is moderate and not high risk.”
She, however, warned that the IMF’s verdict was not a licence for the country to take on more debt.
Reacting to the visit, experts at Afrinvest, in their macroeconomic update, aligned with the IMF’s view that a long-term strategy should prioritise reducing reliance on debt and strengthening Nigeria’s fiscal position through prudent spending, improved tax collection, and efficient budget allocation, all within the framework of real economic growth.
