FGN Bond subscriptions fall to N2.83 trillion in Q1 2025 as offer volume drops 

The lower subscription volume follows a reduction in the number of bond offers, as the government sought to moderate its borrowing amid high interest rates.

The Federal Government offered a total of N1.10 trillion in FGN bonds in Q1 2025, significantly lower than the N3.31 trillion offered in Q1 2024. This 66.8% decrease reflects a cautious approach, with the government opting to issue fewer instruments per auction while deepening liquidity in existing bonds.

Despite the reduced volume, the total amount allotted stood at N1.94 trillion, down 23% from N2.52 trillion in Q1 2024.

The decline in bond offers in 2025, compared to the previous year, signals a strategic shift by the Federal Government towards a more restrained borrowing pattern. This move aligns with the current high-interest rate environment, where managing debt sustainability has become crucial.

Marginal rates across bonds in Q1 2025 indicate a market adjustment, with January 2025 seeing rates ranging from 21.79% to 22.60%, significantly higher than January 2024’s range of 15.00% to 16.50%. By March 2025, marginal rates slightly eased to between 19.00% and 19.99%, suggesting a potential stabilisation of interest rate expectations.

Despite the conservative borrowing stance, investor appetite remained robust, particularly for medium- to long-term risk-free assets like the 7-year and 10-year bonds, which continue to attract institutional investors due to their alignment with long-term liabilities. The DMO’s strategy also supports price discovery in the secondary market while maintaining benchmark bonds across key tenors.