FG raises ₦748.64bn from bond market as borrowing costs ease Investors submit ₦1.49tn bids for FGN bonds, while 15-year bond rate drops by 94 basis points

The Federal Government raised ₦748.64 billion from the domestic bond market in September, as investors submitted bids worth nearly twice the amount allotted, amid signs of easing borrowing costs.

Investors placed bids worth approximately ₦1.49 trillion for the two Federal Government of Nigeria (FGN) bonds offered by the Debt Management Office (DMO), against an initial offer of ₦1 trillion.

The auction featured a new 10-year bond maturing in September 2036 and a reopening of the 15-year bond maturing in June 2038.

For the 10-year bond, the government offered ₦400 billion, while investors submitted bids worth ₦546.90 billion, representing demand about 36.7 per cent above the amount on offer.

The DMO eventually allotted ₦288.63 billion at a marginal rate of 16.79 per cent.

The 15-year bond attracted stronger demand, with investors submitting bids worth ₦947.83 billion against the ₦600 billion offered, representing subscriptions approximately 58 per cent above the initial offer.

The DMO allotted ₦460.01 billion for the 15-year instrument at a marginal rate of 16.85 per cent.

A notable development was the decline in the marginal rate for the 15-year bond from 17.79 per cent recorded at the August auction to 16.85 per cent in September.

The 94-basis-point reduction indicates that investors were willing to accept lower returns on the long-term government security compared with the previous auction.

Unlike the 15-year instrument, the new 10-year bond has no previous auction rate for direct comparison.

In total, the government allotted ₦748.64 billion from the two bonds, leaving a substantial portion of the initial ₦1 trillion offer unallotted despite the strong investor demand.

The figures highlight continued appetite for Federal Government securities, even as borrowing costs show signs of moderating.

The reduction in the 15-year bond rate is particularly significant because it provides a direct comparison with the same instrument offered at the previous auction.

The development could indicate gradually improving conditions in Nigeria’s domestic debt market following a period of elevated interest rates that pushed government borrowing costs higher.

Lower government bond yields could also have wider implications for the financial system, as Federal Government securities serve as important benchmarks for pricing treasury bills, corporate bonds and other fixed-income instruments.

However, borrowing costs remain high, with the government still paying close to 17 per cent on long-term naira-denominated debt.

The September auction comes as the Federal Government continues to rely on the domestic debt market to finance budgetary obligations and manage its debt portfolio.

The government faces the challenge of raising funds to meet its financial commitments while balancing borrowing costs against the growing burden of public debt servicing.