WATCH THE VIDEO HERE Investor interest in Nigeria’s 5-year Federal Government bond collapsed in May 2025, with the offer undersubscribed by 83%, signaling a sharp shift in market sentiment compared to the previous month. The auction result, published by the Debt Management Office (DMO) and obtained by Naijaonpoint, showed that while the 9-year bond maintained strong investor demand, the shorter 5-year paper saw dramatically reduced interest amid a slight dip in the marginal rate. The auction, conducted on May 26, 2025, reopened two instruments: the 19.30% FGN APR 2029 (5-Year Bond) and the 19.89% FGN MAY 2033 (9-Year Bond). The 5-year bond suffered a severe blow in investor confidence. From an offer size of N100 billion, the bond attracted just N16.44 billion in total bids, resulting in an undersubscription rate of 83.56%. This is the same trend from April 2025, when the same bond, then offered at N200 billion, attracted N43.79 billion in bids. The fall in demand for the 5-year bond shows a shifting preference in the market toward longer-term instruments. The shorter end of the curve may be losing its appeal due to policy uncertainty and less attractive risk-adjusted returns. Meanwhile, the sustained demand for the 9-year paper, even at slightly lower yields, reflects continued investor confidence in Nigeria’s long-term credit outlook and the allure of locking in high fixed income over a longer horizon. From a funding strategy perspective, the DMO appears to have taken a conservative stance on allotments in May, especially on the 9-year bond, potentially to manage borrowing costs or reduce near-term repayment obligations.
Investors shun 5-year tenor bonds, undersubscribe by 83% in latest FGN bond auction
