Nigeria’s fixed-income market opened the week on a strong note as the Debt Management Office (DMO) launched a fresh ₦260 billion bond issuance.
The issuance, which forms part of the Federal Government’s domestic borrowing plan for 2025, features two tranches with coupon rates of roughly 17.95 percent, reopening existing five- and seven-year instruments that mature in 2030 and 2032 respectively.
Market participants said the pricing reflects the sustained tight-money environment and the government’s need to keep rates attractive enough to maintain market liquidity.
Institutional investors, particularly pension funds and asset managers, are expected to dominate the subscription as they continue to rotate toward long-dated risk-free assets offering returns well above prevailing deposit and Treasury-bill yields.
Dealers said early bids indicate strong demand, with investors positioning to lock in double-digit yields ahead of year-end monetary policy adjustments.
The auction comes at a time when domestic borrowing has become the government’s primary funding channel. Between January and August 2025, official data showed bond sales already above ₦3 trillion, with subscription levels nearly doubling initial offers.
The latest auction is therefore seen as an opportunity for the DMO to sustain momentum in local debt mobilisation while deepening the benchmark curve for corporate issuers.
Analysts note that the high coupon underscores the fiscal cost of funding in an inflation-pressured economy but remains critical for sustaining investor confidence.
The issue is expected to attract significant interest from commercial banks seeking liquidity-qualifying assets as well as portfolio managers balancing risk exposure ahead of the 2026 budget cycle.
Allotments from the auction will settle on October 29 and, as with previous issues, interest will be paid twice a year.
The bonds, backed by the full faith and credit of the Federal Government, are listed on both the Nigerian Exchange Limited and FMDQ OTC to enhance secondary-market trading and transparency.
Market watchers said the outcome of the sale will provide a clear signal of investor sentiment going into the final quarter of the year, when the DMO typically front-loads issuances to manage cash-flow obligations.
With headline inflation still above 30 percent and monetary policy tight, appetite for long-term sovereign paper remains a reliable barometer of confidence in Nigeria’s debt trajectory.
If subscriptions follow recent patterns, analysts expect the total value of domestic borrowings in 2025 to edge closer to ₦3.3 trillion before December, reaffirming government’s growing reliance on the local capital market to fund its fiscal deficit.