FG Records Strong Investor Appetite in July Bond Auction, Allots N185.9 Billion Amid Yield Decline

The Federal Government of Nigeria, through the Debt Management Office (DMO), successfully raised N185.9 billion in its July 2025 bond auction, reflecting strong investor interest and confidence in government securities. The auction featured the re-opening of two Federal Government bonds: a five-year bond maturing in April 2029 with a 19.30% coupon rate and a seven-year bond maturing in June 2032 carrying a 17.95% coupon rate. The results showed a remarkable oversubscription, particularly for the longer-tenor bond.

Investor enthusiasm was clearly evident in the volume of bids received. The five-year APR 2029 bond attracted N39.1 billion in subscriptions, while the seven-year JUN 2032 bond garnered a staggering N261.6 billion. Despite these high figures, the DMO allotted N13.4 billion and N172.5 billion respectively, far exceeding the initial offer sizes, bringing the total allotment to N185.932 billion. This marked an increase compared to the N100 billion offered in the previous month.

Interestingly, the bonds were allotted at marginal rates lower than their coupon rates, indicating a decline in yield expectations. The five-year bond cleared at 15.69%, and the seven-year at 15.90%. Analysts interpret this as a sign that investors anticipate stabilizing inflation or consistent monetary policy in the short to medium term, making fixed-income instruments more attractive despite lower yields.

The auction drew 149 bids in total, with 74 of them accepted—15 for the APR 2029 bond and 59 for the JUN 2032 bond. Compared to the June 2025 auction, which saw a similar structure but fewer allotments (only N1.05 billion for the five-year and N98.95 billion for the seven-year bonds), the July outing showed a significant uptick in market activity and investor participation.

The DMO emphasized that the issuance adhered strictly to Nigeria’s regulatory framework under the Debt Management Office Act (2003) and Local Loans Act (CAP. L17). Each bond unit is priced at N1,000 with a minimum subscription of N50,001,000, and interest is paid semi-annually. Principal repayment will be made in a bullet payment at maturity. The success of the auction highlights investor confidence in Nigeria’s debt instruments and the government’s fiscal management strategy.

Source: Nairametrics