The Federal Government of Nigeria (FGN) has successfully raised ₦136 billion through its latest bond auction, underscoring continued investor appetite for medium-term debt instruments despite high borrowing costs in the domestic market.
According to the Debt Management Office (DMO), the auction, which took place on August 25, 2025, featured the issuance of a new five-year FGN August 2030 bond and a reopening of the seven-year FGN June 2032 bond. Both instruments will be settled on August 27, 2025.
The DMO disclosed that while the government initially offered ₦100 billion for each bond series, total bids far exceeded expectations.
The five-year instrument attracted ₦102.36 billion in bids, while the seven-year option drew an impressive ₦165.81 billion, indicating significant investor interest in Nigeria’s fixed-income market.
Out of these bids, the government allotted ₦46.01 billion for the August 2030 bond and ₦90.16 billion for the June 2032 bond, bringing the total allotment to ₦136.17 billion.
Market analysts note that the outcome highlights the resilience of Nigeria’s domestic debt market at a time when the FG is intensifying efforts to mobilise non-oil revenues and plug financing gaps in the 2025 budget.
Successful bids for the five-year bond were allotted at a marginal rate of 17.945%, while the seven-year bond cleared at 18%.
Both rates reflect Nigeria’s elevated interest rate environment, following the Central Bank of Nigeria’s sustained monetary tightening to curb inflation and stabilise the naira.
The DMO further revealed that bids for the five-year bond ranged between 12.5% and 21.5%, while the seven-year bond attracted offers between 15% and 22%, signaling investors’ cautious pricing of government debt amid macroeconomic uncertainties.
Despite the elevated borrowing costs, the auction is expected to provide much-needed liquidity for federal projects, while offering investors attractive risk-adjusted returns.
The issuance of these medium-term bonds forms part of the government’s broader strategy to diversify financing sources, restructure public debt, and fund infrastructure projects.
Analysts believe proceeds from the auction will likely support critical sectors such as road construction, energy projects, and agriculture, aligning with the administration’s medium-term fiscal strategy.
In its auction circular, the DMO stressed that the FGN bonds remain backed by the full faith of the FG providing investors with security in an otherwise volatile economic environment.
Financial experts say the auction reinforces the role of bonds as a stabilising investment option for pension funds, insurance companies, and institutional investors.
“Despite inflationary pressures, government securities remain one of the most reliable instruments in the Nigerian market.
The oversubscription shows investors are still confident in the government’s ability to meet its debt obligations,” said a Lagos-based investment banker.
The high marginal rates, however, also signal rising debt servicing costs for the government, which already spends a significant portion of its revenues on interest payments.
This latest allotment comes just days after the DMO announced the offering of ₦200 billion in FGN savings bonds, including a reopening of the June 2032 bond with a coupon rate of 17.95%.
Nigeria’s growing reliance on domestic borrowing has sparked debate among economists, with some urging the government to accelerate reforms that boost revenue generation and reduce fiscal deficits.
Still, the bond auction is widely seen as a success for both the government and investors, offering mutual benefits: access to capital for the state, and stable, relatively high-yield returns for bondholders.
The successful allotment of ₦136 billion in medium-term bonds confirms strong investor participation in Nigeria’s debt market despite tight economic conditions.
While it provides short-term relief for the government’s financing needs, experts caution that long-term sustainability will depend on fiscal reforms, prudent debt management, and stronger economic growth.
As the government continues to balance growth financing with debt sustainability, investors will be closely watching upcoming auctions and fiscal policy directions for signs of market stability and long-term confidence.