Nigeria’s Debt Management Office (DMO) on Tuesday reported that the Federal Government’s bond auction for February recorded a surge in investor demand, with total subscriptions rising to N1.63 trillion and reflecting an increase from the N670.94 billion subscription to the January 2025 bond auction.
The remarkable rise in investors’ demand for the debt instrument in February led to higher allotments even though the yields dropped, reflecting stronger investor confidence in Nigeria’s debt market. This is according to the auction result released by the Debt Management Office on its website on Tuesday.
The FGN bond auction, which was conducted by the DMO on February 24, involved the reopening of the 19.30% FGN APR 2029 (five-year bond) and the 18.50% FGN FEB 2031 (seven-year bond). Unlike the January FGN bond auction which featured a 10-year bond, the February bond auction was limited to two instruments.
An analysis of the bond auctions for the period in review showed that the total amount offered for both bonds totalled N350 billion, with N200 billion allocated for the five-year bond and N150 billion for the seven-year bond.
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Interestingly, investor demand for the bonds surged with the total allotment rising to N910.39 billion, far higher than both the initial offer and the total allotment for January.
It would be recalled that in January, the government initially offered N450 billion across three five-year, seven-year, and ten-year bond tenors but eventually allotted N601.04 billion after considering investor increasing appetite for the debt instrument.
According to the data published by the DMO, the breakdown for January showed N78.86 billion was allotted for the five-year bond, N153.87 billion for the seven-year bond, and N368.31 billion for the ten-year bond.
The just concluded February auction had a lower offer amount of N350 billion and recorded a total allotment that was 51.5% higher than January’s figures.
For instance, in February the five-year bond’s allotment rose to N305.36 billion while the seven-year bond’s allotment surged to N605.03 billion
Investment experts believe that the absence of the ten-year bond in February may have contributed to the significant surge in subscriptions for the shorter-tenor instruments, as investors redirected their funds.
Despite the larger allotments, yields declined sharply in February. For instance, while in January the five-year bond was auctioned at a marginal rate of 21.79% and the seven-year bond had a marginal rate of 22.50%, in February the rates dropped to 19.20% and 19.33% respectively.
