Nigeria targets N460bn as DMO reopens local bond issuance
Nigeria’s Debt Management Office (DMO) is set to open fresh subscriptions for Federal Government bonds, targeting N460 billion from the domestic market as authorities intensify local borrowing to sustain fiscal financing needs following a successful return to the Eurobond market in the fourth quarter.
According to the auction circular, the DMO plans to raise N230 billion from the reopening of a 5-year note and another N230 billion from the reopening of the 7-year bond.
The issuance size is double the previous month’s offer and reflects the government’s continued shift toward leveraging the depth of the local debt market to support budget implementation.
The expansion follows a strong performance at the November auction, where the DMO sought to raise N260 billion but attracted subscriptions exceeding N1.27 trillion, indicating robust investor demand for government securities.
Despite the heavy bid book, the agency allotted N313.771 billion and cut spot rates across maturities as market pricing adjusted to improving macroeconomic expectations.
At the last auction, the yield on the 5-year bond dropped to 15.832 per cent from 16 per cent, while the 7-year note declined to 15.85 per cent from 16.20 per cent. AAG Capital Limited noted that the additional N650 billion allotted in the secondary market contributed to a noticeable repricing along the yield curve as investors demanded a higher premium for longer-term exposure.
Yet, analysts say next week’s auction could see further moderation in cut-off rates, supported by continued easing in headline inflation and a rising spread between nominal yields and real returns on naira assets.
However, some analysts caution that the Central Bank of Nigeria’s recent decision to hold Treasury bill rates steady despite disinflation may inject an element of uncertainty into pricing outcomes.
The upcoming issuance will provide a key indicator of investor sentiment toward local funding conditions as government borrowing continues to scale up in line with fiscal needs and market capacity.
