The Debt Management Office (DMO) has disclosed that it raised approximately N3.03 trillion from domestic borrowing between January and August 2025, reflecting the Federal Government’s continued reliance on the local debt market to finance its growing fiscal deficit.
According to data from the Federal Government of Nigeria (FGN) bond auction results, the DMO had initially offered about N2.13 trillion across short-, medium-, and long-dated bonds within the eight-month period.
However, strong appetite from investors, especially for long-term securities, pushed total subscriptions to N4.94 trillion, underscoring the attractiveness of government debt as a relatively safe investment option in an environment of economic uncertainty.
The report revealed that most of the demand was concentrated in longer tenors such as the FGN January 2035 and April 2029 bonds, which carried interest rates of 22.60 per cent and 19.30 per cent, respectively.
Analysts say the strong interest in long-dated instruments reflects investor expectations of sustained high yields amid persistent inflationary pressures and tighter monetary policy from the Central Bank of Nigeria (CBN).
Despite this strong appetite, the amount raised in 2025 was 34.14 per cent lower than what was mobilised during the same period in 2024, highlighting the government’s more cautious approach to domestic borrowing this year.
January 2025 opened with the DMO offering three bonds, which recorded mixed levels of investor interest.
By February, the release of rebased Consumer Price Index (CPI) figures triggered a bullish rally, leading to increased demand for high-yield securities. The agency successfully raised N910.39 billion that month.
In April, the focus shifted to mid-curve instruments, with over N397 billion allotted.
June was particularly notable as the DMO offered N100 billion but received an oversubscription of N602.86 billion, reflecting investors’ growing confidence in government debt.
A report by Cowry Assets in August noted that while demand remained strong, the DMO allotted N136.2 billion, lower than July’s N185.9 billion, citing tighter liquidity conditions.
The reopening of the 10-year benchmark (June 2032) bond attracted over N165 billion in subscriptions, clearing at a higher marginal rate of 18.00 per cent, compared to 15.90 per cent in July.
The Federal Government has consistently turned to domestic borrowing to plug financing gaps amid revenue challenges.
However, President Bola Tinubu recently disclosed that the administration had stopped borrowing from local banks, noting that improved fiscal performance and stronger revenue mobilisation had reduced reliance on the banking sector.
Figures released by his media aide, Bayo Onanuga, show that between January and August 2025, the government recorded N20.59 trillion in total collections, a 40.5 per cent increase from N14.6 trillion during the same period in 2024. Of this, about N15.69 trillion came from non-oil revenues, signaling progress in the administration’s diversification drive.
Despite the stronger revenue performance, analysts say Nigeria still faces a trillion-naira fiscal deficit that will require significant borrowing in the second half of the year.
A mid-year outlook report by CardinalStone Partners projected that the Federal Government may need a net issuance of about N10.08 trillion in Treasury Bills and Bonds to finance its 2025 deficit.
The report further stated that the government had sought National Assembly approval for $21 billion, €2.2 billion, and ¥15 billion under its external borrowing plan.
Analysts expect that at least $4.9 trillion equivalent may be sourced externally, with part of the proceeds used to settle Nigeria’s $1.12 billion Eurobond maturity due in November and service cumulative coupons worth $1.38 billion.
Market experts warn that the local bond market may remain under pressure in the months ahead.
The combination of the DMO’s heavy supply programme, CBN’s liquidity mop-ups, and rising stop rates is likely to keep yields elevated, especially on long-dated securities.
Speaking on the development, a Lagos-based financial analyst, Chinedu Okafor, said:
“While the DMO has managed to raise significant funds locally, the government cannot depend solely on domestic markets.
There’s a risk of crowding out private sector borrowing, which could slow investment and economic recovery.
The balance between domestic and external borrowing will be critical in the months ahead.”
Nigeria’s debt strategy remains under close watch by both local and international stakeholders.
While the rise in non-oil revenues is a positive sign, experts caution that the country’s debt servicing obligations, which already consume a large share of government revenue, must be carefully managed to avoid future fiscal strain.
For now, the N3.03 trillion raised by the DMO underscores the depth of Nigeria’s domestic debt market, as well as the resilience of investors who continue to see government bonds as a safe haven despite economic headwinds.
