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THE Federal Government of Nigeria has successfully raised N346.155 billion in its November bond auction, leveraging strong market demand for fixed-income securities despite economic uncertainties.
The auction, conducted by the Debt Management Office (DMO) on November 18, 2024, included reopenings of the 19.30 percent FGN APR 2029 (five-year bond) and the 18.50 percent FGN FEB 2031 (seven-year bond).
In November, the total amount offered was N120 billion, split equally at N60 billion for each bond series—a 33.33 percent reduction from October’s offer of N180 billion. Despite the lower offerings, total allotments increased significantly, rising by 19.50 percent to N346.155 billion, compared to N289.597 billion in October.
For the five-year bond, N63.530 billion was allotted, while the seven-year bond saw a larger allotment of N282.625 billion. In October, the allotments were N57.237 billion and N232.360 billion, respectively.
Investor interest remained robust but moderated slightly, with total subscriptions in November amounting to N369.585 billion—a 5.06 percent decline from October’s N389.321 billion. The five-year bond attracted N75.560 billion in subscriptions, up from N60.737 billion in October, while the seven-year bond recorded a drop in subscriptions to N294.025 billion from N328.584 billion.
The auction also featured a non-competitive allotment of N500 million, a mechanism designed to provide retail investors and smaller participants access to fixed-income instruments without direct competition at marginal rates.
Marginal rates increased in November, reflecting tighter liquidity conditions. The five-year bond’s marginal rate rose to 21.00 percent from 20.75 percent in October, while the seven-year bond’s rate increased to 22.00 percent from 21.74 percent. Bid ranges for the five-year bond spanned 19.00 percent to 21.90 percent, and for the seven-year bond, 18.00 percent to 23.00 percent.
The rise in marginal rates suggests upward pressure on borrowing costs, potentially driven by inflationary pressures and monetary policy adjustments. Notably, the overwhelming interest in the seven-year bond compared to the five-year bond indicates a preference for longer-term instruments, likely reflecting expectations of sustained high interest rates in the medium term.
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