Investors eye September issuance as FG concludes N200bn August Bond Auction

THE Federal Government of Nigeria (FGN), through the Debt Management Office (DMO), has wrapped up its August 2025 bond auction, floating N200 billion worth of sovereign bonds to investors.

According to a circular released on Thursday, the auction was conducted on Monday, August 25, with settlement scheduled for Wednesday, August 27. The offer comprised N100 billion of the FGN JUL 2030 bond (five-year tenor, re-opening) and N100 billion of the 17.95 per cent FGN JUN 2032 bond (seven-year tenor, re-opening).

Each unit was priced at N1,000, with a minimum subscription of N5,000 and additional multiples of N1,000, capped at N50 million per investor. As reopened issues, the coupon rates remained fixed, while final pricing was determined by the clearing bid yield-to-maturity (YTM). Interest will be paid semi-annually, with bullet repayment of principal at maturity.

The issuance aligns with provisions of the Debt Management Office (Establishment) Act, 2003, and the Local Loans (Registered Stock and Securities) Act, CAP L17, Laws of the Federation of Nigeria, 2004.

The August exercise followed a robust July 2025 auction, in which the DMO allotted N185.93 billion across two reopened bonds amid strong demand. The five-year FGN APR 2029 bond attracted N39.08 billion in subscriptions, with N13.43 billion allotted. Meanwhile, the seven-year FGN JUN 2032 bond receivedN261.60 billion in bids, with N172.50 billion allotted—exceeding the original offer size.

Despite unchanged coupon rates of 19.30 per cent and 17.95 per cent, the bonds cleared at lower marginal rates of 15.69 per cent and 15.90 per cent, respectively. Analysts interpreted this as a sign of rising investor confidence, reflecting expectations of moderating inflation and a more stable monetary outlook.

Overall, the July auction drew 149 bids—40 for the 2029 bond and 109 for the 2032 issue—with 74 successful submissions. Total subscriptions stood at n268.17 billion, producing a bid-to-cover ratio of 1.34. However, the DMO allotted just N136.17 billion, below both offer size and demand, reflecting its cautious strategy to manage yields.

Despite the measured allotment, yields moved sharply upward. The FGN JUL 2030 bond closed at 18.00 per cent, while the FGN JUN 2032 issue was allotted at 17.95 per cent. This repricing underscores the effects of tight system liquidity and the Central Bank of Nigeria’s hawkish stance, with inflation still hovering above 20 per cent.

Market watchers note that the higher yields suggest investors are demanding stronger compensation for risk, given the persistence of macroeconomic headwinds including currency depreciation, subsidy removals, and tightening global financial conditions.

With the August issuance completed, attention now shifts to the September 2025 auction. Analysts anticipate continued strong demand as investors position in the fixed-income market, which is offering comparatively safer and higher-yielding opportunities.

Short-to medium-term sovereign bonds are expected to remain attractive, given their competitive returns and reinvestment flexibility. While the seven-year 2032 issue is currently yielding near 18 per cent, shorter tenors are presenting comparable effective yields with lower duration risk—making them appealing to investors navigating an uncertain economic climate.

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