How FG Borrowed N1.94trn in Q1 2025 Bond Auction to Finance Budget Deficit
Kayode Tokede
The Debt Management Office (DMO), on behalf of the federal government borrowed an estimated N1.94 trillion via the FGN bond auction in the first quarter of (Q1) 2025 to finance the 2025 budget deficit.
The government is projected to borrow approximately N13 trillion from FGN bonds in 2025 to finance budget deficit, with a significant portion expected to be raised in the first quarter through a mix of new and re-opened bonds.
Last year, the government borrowed an estimated N5.84 trillion from the FGN bond market to bridge its 2024 budget deficit.The total subscription across the seven bond tenors was N1.17 billion in Q1 2025, while the total amount offered by DMO stood at N1.1 trillion in Q1 2025.
As gathered by THISDAY, the sharp rise in demand led to higher allotments in Q1 2025, even as yields fell, reflecting stronger investor confidence in Nigeria’s debt market.
The DMO in its latest FGN auction result for March 2025 offered investors N300 billion FGN bond, and its subscription level was at N530.31 billion. The debt management office, thus allotted N423.68 billion. The DMO had re-open 19.30 per cent FGN APR 2029, The February 2025 auction involved reopening the 19.30 per cent FGN APR 2029 (five-year bond) and the 18.50 per cent FGN FEB 2031 (seven-year bond).
The total amount on offer for both bonds was N350 billion, with N200 billion allocated for the five-year bond and N150 billion for the seven-year bond.
However, strong demand saw the total allotment jump to N910.39 billion, surpassing both the initial offer and the total allotment for January.
The five-year bond’s allotment rose to N305.36 billion, nearly four times its January level, while the seven-year bond’s allotment also jumped to N605.03 billion.
The DMO in January 2025 auction had successfully raised a total of N669.94 billion, with N601.03 billion allotted across three bond tenors. The debt management had seek investtors support to raise N450 billion.
The January 2025 FGN bond auction had marked another significant milestone in the government’s bid to finance critical infrastructure projects and support budgetary needs through domestic borrowing
The DMO said the robust subscription levels highlight continued investor confidence in the government’s debt instruments, driven by attractive yields and Nigeria’s stable credit ratings.
Analysts stated that the lower bond yields typically indicate that investors perceive reduced risks and are willing to accept lower returns in exchange for safety.
Also, the strong participation in Q1 2025 auction suggests that large institutional investors, such as pension funds and asset managers, had excess liquidity to deploy, further compressing yields.
Meanwhile, analysts stated that the strong demand for FGN bond to attractive yield, which offers investors high returns on their investments, stressing that the oversubscriptions also revealed that investors have confidence in the federal government’s ability to meet its debt obligations.
Commenting, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf had stated that the FG notified the general public of borrowing more this year.
He said, “With all the volatility and foreign exchange issues, it makes sense to borrow at the domestic market rather than borrowing from the international market. It is all a reflection of our macroeconomic environment challenges and weak fiscal policy of the government.
“All this borrowing also is a reflection of the weak financial position of the government and it will continue like that this year.
“The appetite for FGN bonds indicates that PFAs, and Nigerian investors prefer investment instruments with less volatility that assures them of their capital returns albeit with low yield on investment.”
Meanwhile, in recent years, Nigeria’s rising debt profile has been a topic of concern, as Vice President, Highcap Securities Limited, Mr. David Adnori, warned that the country’s debt levels are unsustainable.
