DMO creates fresh N397.9bn debt burden in April 2025 bond auction

The Debt Management Office (DMO) may have created fresh debt burden for the country, revealing that the Office allotted a total of N397.898 billion across two re-opening issues, the 19.30 per cent FGN APR 2029 (5-Year Bond) and the 19.89 per cent FGN MAY 2033 (9-Year Bond), at the April 2025 Federal Government of Nigeria (FGN) Bond Auction.

The auction, held on April 28, 2025, has April 30, 2025, as the settlement date.

According to the DMO’s official data, the auction saw mixed investor interest across the two maturities.

The 2033 bond was oversubscribed significantly, while the shorter-dated 2029 note witnessed modest demand.

The 5-year FGN Bond, offered at a coupon rate of 19.30 per cent, recorded a total allotment of N21.127 billion across 13 successful subscriptions.

The 9-year FGN Bond, which carries a higher yield of 19.89 per cent, garnered stronger interest, with a total allotment of N376.771 billion from 137 successful subscriptions.

The FGN bond continues to attract strong participation as Nigerians seek safer and more predictable returns amid broader market uncertainties.

The relatively high interest rates for the April offer underscore the government’s bid to raise domestic capital while offering attractive yields to encourage savings.

It was discovered that investor appetite was clearly skewed toward the longer-dated 2033 bonds, which attracted N452.16 billion in total bids—more than triple the N150 billion on offer. This resulted in a competitive allotment of N376.77 billion and an additional N73 billion via non-competitive bids, pushing total allotments for the 2033 paper to N449.77 billion.

In contrast, the 2029 bond saw subdued demand, attracting bids worth N43.79 billion against an offer size of N200 billion. The DMO allotted only N21.13 billion competitively and N50 billion non-competitively, totaling N71.13 billion.

Both issues were allotted at marginal rates of 19.00 per cent for the 2029 bond and 19.99 per cent for the 2033 bond. However, the original coupon rates of 19.30 per cent and 19.89 per cent, respectively, will be maintained, the DMO stated.

Market watchers say the strong oversubscription of the 2033 paper suggests investors’ preference for longer-dated instruments in the current rate environment, likely driven by expectations of future monetary easing or sustained inflation hedging.

Credit: The Guardian