FG targets N450b from January bond auction

The Federal Government is aiming to raise N450 billion from its January 2015 bond auction scheduled for opening on Monday, January 27.

The Debt Management Office (DMO) which announced this said the move is in line with the strategic plan of the government to address a projected budget deficit of N13.08 trillion in 2025, equivalent to 3.87 per cent of the country’s Gross Domestic Product (GDP).

It said the bonds will serve as a key tool for financing critical infrastructure and tackling fiscal gaps.

The January 2025 bond auction includes three categories of bonds. The first is a five-year bond with a 19.30 per cent coupon rate, originally issued in April 2029, and the government plans to raise N100 billion from this reopening.

The second offering is a seven-year bond, first issued in February 2031, with an 18.50 per cent coupon rate, through which the government aims to secure N150 billion.

Lastly, the auction includes a new issuance of a 10-year bond, the FGN January 2035 bond, targeting N200 billion. These bonds collectively form a substantial component of the government’s domestic borrowing strategy.

The Federal Government borrowed an estimated N5.84 trillion from the FGN bond market in 2024 amid a move to bridge its 2024 budget deficit.
However, the figures represent a 0.17 per cent decline when compared to the N5.85 trillion borrowed in 2023 through the Debt Management Office.

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The total subscription to FGN bonds was N7.09 trillion in 2024 despite a total offer of N5.72 trillion.
Some experts have raised concerns over the Federal Government’s excessive bond issuance which they say could lead to an increase in the country’s debt burden, making it challenging to service the debt in the long run.

They also said that the government should exercise restraint in its bond issuance to avoid crowding out private sector borrowing, increasing debt servicing costs, and potentially destabilizing the economy.

The DMO reported that the heavy domestic borrowings by the federal government through savings bond issuance helped push up Nigeria’s total public debt in the third quarter of 2024 from N134.3 trillion to N142.3 trillion.

It said the Federal Government accounted for the bulk of domestic debt, which rose from N66.96 trillion in June to N69.22 trillion by September.