By Chinwendu Obienyi
The Debt Management Office (DMO) has raised NGN1.8 trillion year-to-date (YTD) from the domestic bond market, including N1.63 trillion in February and N669.94 billion in January, a report from FBNQuest Merchant Bank revealed on Tuesday.
The report further noted that the demand for FGN bonds held by the debt office dropped significantly lower at the bond auction held on Monday.
At the March 2025 FGN bond auction held by the DMO, the agency offered N300 billion worth of FGN bonds to investors.
However, total demand at the auction was significantly lower than in the previous month, with bids amounting to N530 billion, compared with N1.63 trillion in February.
“Consequently, total sales stood at N271 billion, well below the N910.4 billion recorded at the prior auction. If non-competitive allotments of N152.45 billion are included, total sales amounted to NGN423.7 billion.
The decline in demand was reflected in the weaker sales-to-offer ratio of 0.9x (1.4x including non-competitive bids), down sharply from 2.6x in February.
Marginal rates at the auction declined, reflecting easing market conditions, with the Apr ’29 maturity closing at 19.0 per cent (vs. 19.2 per cent in Feb) and the May ’33 at 19.9 per cent”, analysts at FBNQuest Merchant Bank said.
Based on linear interpolation, the inferred yield for the Feb ‘31 maturity would have settled around 19.13 per cent if issued in March, marking a decline from its February level.
The downward shift in yields aligns with the moderation in inflation, which eased to 23.18 per cent in February 2025 from 24.48 per cent in January. The sharp drop in January’s inflation print, from 34.80% in December, followed the rebasing of the CPI by the National Bureau of Statistics.
The market is also adjusting to signals from the MPC, which, at its February meeting, hinted at potential policy adjustments in response to the revised inflation outlook.
“Year-to-date, the DMO has now raised N1.8 trillion from the domestic bond market. Including non-competitive allotments, the total issuance stands at N1.9 trillion”, the report said.
The amount raised broadly tracks the agency’s implied domestic funding target under the 2025 budget proposals, which include domestic borrowings of N7.4 trillion. The decline in appetite for government securities could increase borrowing costs, affecting Nigeria’s debt sustainability outlook.