The Federal Government of Nigeria raised N1.94 trillion from bond investors in the first quarter of 2025, according to auction results released by the Debt Management Office (DMO).
Despite an initial offer of N1.10 trillion, strong investor demand pushed total subscriptions to N2.83 trillion, leading to a higher allotment. This borrowing was done through FGN bond auctions and excludes funds raised via the FGN savings bond programme.
Breakdown of Q1 2025 Bond Auctions
January 2025: The government offered N450 billion across three instruments—5-year 19.30% FGN APR 2029, 7-year 18.50% FGN FEB 2031, and a newly introduced 10-year 22.60% FGN JAN 2035 bond. Investors responded with bids worth N669.94 billion, leading to an allotment of N601.04 billion.
February 2025: With an initial offer of N350 billion, investor interest surged to N1.63 trillion, and the government eventually allotted N910.39 billion.
March 2025: The government offered N300 billion across two bonds—the 5-year 19.30% FGN APR 2029 and 9-year 19.89% FGN MAY 2033. Subscriptions stood at N530.31 billion, and N423.68 billion was allotted.
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Year-on-Year Comparison
The N1.94 trillion raised in Q1 2025 was lower than the N2.52 trillion raised in Q1 2024, reflecting a more cautious borrowing strategy amid high interest rates. In 2024, the government had offered N3.31 trillion—significantly higher than N1.10 trillion in 2025—indicating a deliberate slowdown in domestic borrowing.
Rising Interest Rates & Market Confidence
Marginal rates in Q1 2025 increased significantly compared to the previous year, with January 2025 rates ranging from 21.79% to 22.60%, up from 15.00% to 16.50% in January 2024. By March 2025, rates eased slightly to 19.00% to 19.99%, signaling possible stabilization in investor confidence.
Government's Debt Management Strategy
The DMO's approach in 2025 focused on issuing fewer bond instruments per auction while increasing allocations for each, ensuring deeper liquidity in existing instruments and better price discovery in the secondary market.
Recent reports also show the listing of 910.3 million additional units of FGN bonds on the Nigerian Exchange Limited (NGX), boosting the total outstanding units of the 19.30% FGN APR 2029 bond to 768.52 million and the 18.50% FGN FEB 2031 bond to 2.71 billion units.
Debt Sustainability: Expert Opinions
Despite concerns about Nigeria's growing debt profile, the International Monetary Fund (IMF) classified the country's risk as moderate, not high. However, the IMF and investment analysts at Afrinvest emphasize the need for prudent fiscal policies, urging Nigeria to reduce its debt reliance through improved revenue collection and economic growth strategies.
