The Federal Government of Nigeria is gearing up for a significant shift in its domestic bond market strategy. In the second quarter of 2025, the government seeks to raise approximately between N900 billion and N1.2 trillion, marking a notable decline from the N1.8 trillion initially targeted for the first quarter of this year. This adjustment reflects the challenges the Nigerian government faces in navigating a complex fiscal landscape.
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With the release of the FGN Bond Issuance Calendar for the upcoming quarter, published by the Debt Management Office (DMO), it becomes clear that the reduced target is primarily attributable to a blend of factors—namely, dwindling oil revenues, soaring inflation rates, and an alarming budget deficit estimated at N13.08 trillion. This figure represents a staggering 3.87% of the nation’s Gross Domestic Product (GDP), underscoring the dire economic circumstances Nigeria continues to grapple with.
The upcoming bond auctions are carefully scheduled for April 28, May 26, and June 23. During these events, the DMO plans to sell two bond offerings each month, aiming to generate between N300 billion and N400 billion in funds at each auction. This approach combines both reopened bonds and new issuances, allowing the government some flexibility in managing its financial needs. One might wonder: How can a country shift its economic priorities in such turbulent times?
Interestingly, if we look back at the earlier phases of 2025, we see a striking contrast. In the first quarter, the DMO sought to auction three bonds per session, aiming for a monthly haul between N450 billion and N600 billion, and targeting an ambitious total of N1.8 trillion. The bonds then offered included the 19.30% FGN bond maturing in April 2029, the 18.50% FGN bond maturing in February 2031, and a fresh 10-year FGN bond set to mature in January 2035. Each of these bonds had offerings ranging from N150 billion to N200 billion, showcasing a more aggressive approach to bond sales.
Furthermore, the DMO is set to introduce two new bond issues in June: the FGN bonds maturing in January 2030 and January 2032, with original tenors of five and seven years, respectively. This reflects not just the government’s attempt to diversify its offerings but also to attract a broader spectrum of investors who may be looking for varying timelines and commitments.
For investors contemplating participation, it’s crucial to note the specifics of what is being offered. For instance, in April, the APR 2029 bond will have four years left to maturity, and the May 2033 bond will present a six-year and one-month timeline. By May, the tenures shorten but remain within an appealing range for fixed-income investors. Both bonds maintain their original coupon rates—19.30% and 19.89%—which could pique the interest of potential bidders seeking stable returns amid economic uncertainty.
As reported by the DMO, the April auction’s preliminary information indicates that N350 billion will be raised through the reopening of the APR 2029 and MAY 2033 bonds. Specifically, N200 billion will be allocated for the APR 2029 bond, while N150 billion will be designated for the MAY 2033 bond. This auction will take place on Monday, April 28, with settlements scheduled for Wednesday, April 30. Picture the investors gathering for these auctions, the tension palpable, each one hoping to stake their claim in what could prove to be a fruitful engagement.
Each bond unit is priced at N1,000, necessitating a minimum subscription of N50,001,000, with subsequent investments in multiples of N1,000. Although the coupon rates are fixed, successful bidders will pay prices reflective of the yield-to-maturity and accrued interest up to the settlement date. It’s a delicate dance of numbers that could lead to significant financial repercussions for both the government and its investors.
Investors should also appreciate that these bonds offer a semi-annual interest payment structure, while the principal investment is fully repaid when the bonds mature. They are classified as securities under the Trustee Investment Act, are exempt from taxes under the Company Income Tax Act and Personal Income Tax Act, and count as liquid assets for banks assessing their liquidity ratios. Moreover, these bonds hold listings on the Nigerian Exchange and the FMDQ OTC Securities Exchange, affirming their credibility and accessibility in the financial market.
As we examine the current landscape of Nigeria’s domestic bond market, one must also consider the broader implications of these moves. What challenges lie ahead for a nation attempting to balance fiscal responsibility while fostering growth? In an environment riddled with economic hurdles, will these strategies indeed pave the way for recovery, or will they signal the need for a more profound transformation in fiscal management?
Investors, policymakers, and citizens alike have a stake in understanding the dynamics at play. After all, economic resilience is often forged in the fires of adversity. Engaging with these developments is not just advisable; it’s essential for anyone looking to grasp the future of Nigeria’s economic wellness.
Edited By Ali Musa
Axadle Times International – Monitoring
