The Federal Government of Nigeria has successfully raised N374.751 billion in its FGN bond auction held in August 2024, according to results published by the Debt Management Office on its website.
This latest auction marks a significant rebound, with the total amount allotted representing a 66.05% increase compared to the N225.714 billion raised in July 2024. The August auction, conducted on August 19, 2024, came despite a 36.67% reduction in the total bond offer, which was set at N190 billion. Total subscriptions surged by 64.57% to reach N460.182 billion, indicating a renewed investor interest in government securities.
The auction featured three bonds with varying tenors—5 years, 7 years, and 9 years—highlighting a crucial moment in Nigeria’s efforts to secure funding for ongoing projects.
The 19.30% FGN APR 2029 bond, with a five-year maturity, attracted limited interest from investors. Despite offering a relatively high coupon rate of 19.30%, the bond saw subscriptions totaling just N24.349 billion, significantly lower than the N70 billion initially offered.
The amount allotted was N18.349 billion at a marginal rate of 20.30%, indicating a substantial undersubscription of 65.22%. This lukewarm response suggests a decreased appetite for shorter-tenor bonds among investors, possibly due to the relatively lower yields and shorter investment horizon compared to longer-term options.
In contrast, the 18.50% FGN FEB 2031 bond, which has a seven-year maturity and a coupon rate of 18.50%, experienced moderate interest. Subscriptions for this bond amounted to N60.750 billion, slightly falling short of the N70 billion offered.
The bond was allotted N42.189 billion at a marginal rate of 20.90%, reflecting a more modest undersubscription of 13.21%. This indicates a moderate level of confidence in medium-term government securities, suggesting that while investors are willing to commit funds, they prefer a balance between yield and investment duration.
The most notable performer was the 19.89% FGN MAY 2033 bond, which offers a nine-year maturity and a high coupon rate of 19.89%. This bond saw exceptional interest, with total subscriptions reaching N375.083 billion, far exceeding the N50 billion offered. It was allotted N314.213 billion at a marginal rate of 21.50%, reflecting a remarkable oversubscription of 650.17%.
The significant demand for this bond underscores its attractiveness, driven by its extended tenor and high yield, which align well with investors’ strategies for securing higher returns over a longer period.
The auction results reveal a clear preference for longer-term bonds, driven by a desire for higher yields amid economic uncertainties. The strong demand for the 9-year bond contrasts with the more subdued interest in the shorter 5-year and 7-year bonds.
The competitive marginal rates—ranging from 20.30% for the 5-year bond to 21.50% for the 9-year bond—reflect the government’s strategy to offer attractive returns to draw investment.
The successful auction provides a crucial funding boost for the government, supporting infrastructure development, debt servicing, and other essential projects. It also demonstrates Nigeria’s ongoing appeal to investors despite economic challenges.
