Nigerian Bond Auction Shows Investor Preference for Longer Tenors
The Federal Government of Nigeria’s recent bond auction, conducted by the Debt Management Office (DMO), revealed investors’ continued preference for longer-dated securities while maintaining stable interest rates.
The auction featured two reopened instruments: a ₦200 billion offering of the APR 2029 bond and ₦150 billion of the FEB 2031 bond, totaling ₦350 billion. Investor subscriptions reached ₦495.95 billion, indicating relatively modest demand for these local bonds compared to Treasury bills and OMO papers.
By the close of the auction, the DMO awarded bonds worth ₦397.9 billion to successful bidders, with ₦123 billion allocated to non-competitive bids at the marginal rates.
According to the official auction results, successful bidders for the 19.30% FGN APR 2029 and 19.89% FGN MAY 2033 instruments received allotments at marginal rates of 19.00% and 19.99%, respectively. The DMO confirmed that these bonds would maintain their original coupon rates of 19.30% and 19.89%.
Market analysis from AAG Capital Limited highlighted strong investor interest in longer-duration bonds, with the FGN MAY 2033 bond receiving bids three times its offer size and settling at 19.99%, in line with analyst projections.
In contrast, the shorter-term FGN 2029 bond attracted minimal investor interest, drawing less than 25% of its offered amount. This bond cleared at 19.00%, unchanged from the previous auction and slightly below AAG Capital’s forecast range.
Financial analysts at AAG Capital Limited observed that these results demonstrate the DMO’s ongoing strategy to minimize borrowing costs despite weak demand for shorter tenors. The overall auction outcome reflects both the market’s appetite for longer-duration instruments and the DMO’s careful approach to preventing yield increases.
