A report from FBNQuest Merchant Bank on Tuesday indicated that the Debt Management Office (DMO) has raised N1.8 trillion year-to-date (Y-T-D) from the domestic bond market, including N1.63 trillion in February and N669.94 billion in January this year.
The report also showed that the demand for FGN bonds held by the DMO remarkably dropped at the bond March 2025 FGN bond auction held on Monday, where the office offered N300 billion worth of FGN bonds for issuance to investors.
But then, the FBNQuest Merchant Bank’s report reflected that total demand at the auction was lower than in the previous month, with bids amounting to N530 billion, compared with N1.63 trillion in February auction round.
The bank clarified: “Consequently, total sales stood at N271 billion, well below the N910.4 billion recorded at the prior auction. If non-competitive allotments of N152.45 billion are included, total sales amounted to NGN423.7 billion.
The decline in demand was reflected in the weaker sales-to-offer ratio of 0.9x (1.4x including non-competitive bids), down sharply from 2.6x in February
Similarly, marginal rates at the auction declined with the Apr ’29 maturity closing at 19.0 per cent (vs. 19.2 per cent in Feb) and the May ’33 at 19.9 per cent.
According to the report, based on linear interpolation, the inferred yield for the Feb ‘31 maturity would have settled around 19.13 per cent if issued in March, marking a decline from its February level.
The report further stated: “Year-to-date, the DMO has now raised N1.8 trillion from the domestic bond market. Including non-competitive allotments, the total issuance stands at N1.9 trillion.”
Analysts at FBNQuest Merchant Bank noted that the downward shift in yields aligned with the moderation in inflation, which eased to 23.18% in February 2025 from 24.48% in January occasioned by the rebasing of the CPI by the National Bureau of Statistics (NBS).
The demand-supply trend in the bond market is also linked to signals from the Central Bank of Nigeria’s (CBN’s) Monetary Policy Committee, which, at its February meeting, hinted of potential policy adjustments in response to the revised inflation outlook.
