The Federal Government of Nigeria, through its Debt Management Office (DMO), has announced plans to raise N300 billion from the capital market via a bond auction scheduled for May 26, 2025. This move is part of the government’s ongoing efforts to finance its budget and manage public debt effectively while offering investors attractive fixed-income opportunities.
According to the official offer circular released by the DMO, the planned issuance includes a reopening of two existing Federal Government of Nigeria (FGN) bonds. The first tranche consists of a N100 billion reopening of the 19.30 percent FGN April 2029 bond, which has a five-year tenor. The second tranche involves a larger N200 billion reopening of the 19.89 percent FGN May 2033 bond, with a nine-year tenor.
The bonds will be offered in units of N1,000 each, with a minimum subscription requirement of N50,001,000. Subsequent subscriptions can be made in multiples of N1,000. Investors will receive interest payments on these bonds semi-annually, while the principal amount will be repaid in full upon maturity.
Although these bonds are reopenings of existing issues, successful bidders will pay a price aligned with the yield-to-maturity that clears the auction volume. This price will also include any accrued interest, ensuring investors are compensated fairly for the period the bond is held.
The DMO highlighted several benefits of these bonds to potential investors. These bonds qualify as eligible securities under the Trustee Investment Act, allowing trustees to invest in them safely. Moreover, they are tax-exempt for pension funds under the Company Income Tax Act and the Personal Income Tax Act, making them particularly attractive to institutional investors such as pension managers and insurance companies.
Furthermore, these bonds are listed on both the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, providing liquidity and ease of trade for investors. Banks also recognize these instruments as liquid assets when calculating liquidity ratios, enhancing their appeal to the financial sector.
The planned auction forms part of the Federal Government’s broader strategy to manage its debt portfolio prudently while supporting the domestic capital market. Bond issuances are preferred instruments for long-term financing, helping to fund critical infrastructure projects and budgetary needs without immediate recourse to more inflationary financing methods.
In the recent past, the DMO has successfully allotted other Federal Government Savings Bonds, including N4.3 billion worth in May 2025, reflecting sustained investor confidence in Nigerian government securities.
The issuance also aligns with efforts to deepen the Nigerian capital market by expanding investment options available to domestic and foreign investors alike. This supports economic diversification goals and provides a stable avenue for savings mobilization.
With interest rates nearing 19-20 percent on these government bonds, investors seeking fixed income can expect relatively high returns compared to many other investment instruments in the market. The semi-annual interest payment schedule ensures regular income, while the tax advantages improve overall yield.
While the macroeconomic environment in Nigeria remains complex, with ongoing inflationary pressures and currency risks, government bonds remain a key pillar for conservative and institutional investors aiming for portfolio stability.
The Federal Government’s N300 billion bond auction scheduled for May 26, 2025, presents a significant opportunity for investors to participate in the government’s financing program while benefiting from attractive yields and tax incentives. As Nigeria continues to navigate fiscal challenges, strategic bond issuances like this play a vital role in sustaining budget financing and capital market development.