Federal government plans to raise N1.8 trillion from federal government bond market in first quarter of 2025
The Nigerian federal government plans to raise a maximum of N1.8 trillion from the bond market in the first quarter of 2025, according to the Debt Management Office (DMO).
The issuance, outlined in the recently released federal government bond calendar, features a mix of reissued and new bonds in three monthly auctions scheduled for January, February and March 2025.
This financing effort is part of the government's strategy to address budget deficits and finance essential infrastructure.
For 2025, the federal government is forecasting a budget deficit of N13.08 trillion, representing 3.87 percent of the country's gross domestic product (GDP). Bond offering schedule
The bond auction schedule includes a re-launch of the 19.30% FGN APR 2029 bond, which has a remaining maturity of four years and three months. The government plans to offer between N150 billion and N200 billion in each of the three auctions, making the bond a key component of the overall issuance. Similarly, the 18.50% FGN FEB 2031 bond will be re-opened, with a maturity of six years and one month from January 2025. This bond will also be offered in the range of N150 billion to N200 billion through the auction. A new bond, called FGN JAN 2035, will debut on the market, aimed at investors seeking long-term instruments. With an initial maturity of 10 years, the bond will also be offered in the range of N150 billion to N200 billion in each auction. Together, the three classes of bonds are expected to raise a total of N450 billion to N600 billion through the auction. If the maximum bid range is achieved in all the auctions, the government would receive N1.8 trillion for the quarter.
The auctions are scheduled for January 27, February 24 and March 24, 2025. While the timing remains subject to change, the structured approach demonstrates the government's focus on meeting funding needs in a transparent and predictable manner. Implications for the economy
The planned bond issuance is expected to play a key role in addressing Nigeria's fiscal problems, particularly the growing budget deficit.
By tapping into the bond market, the government aims to raise funds for critical infrastructure projects and other development initiatives. The case also highlights the government's reliance on domestic borrowing to supplement other sources of revenue, such as taxes and external borrowing. Interest in these bonds is likely to be strong due to their competitive interest rates, especially in a high-interest environment. The mix of medium- and long-term bonds ensures that a wide range of investors, from pension funds to individual buyers, will find suitable options to diversify their portfolios. Furthermore, the duration of the bonds provides a balance between meeting immediate liquidity needs and spreading the repayment obligations over an extended period. The success of these sales will also demonstrate investor confidence in the Nigerian economy and the government's fiscal management. As the economy faces inflationary pressures and revenue shortfalls, increasing the target amount in the bond market will be essential to support economic activity and ensure that the government meets its obligations.
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