Following a substantial N1.94 trillion raised from bond investors in the first quarter of 2025, the Federal Government of Nigeria has announced its intention to further tap into the domestic debt market, seeking to raise an additional N350 billion through its upcoming April 2025 bond auction. This strategic move, as detailed in a statement released by the Debt Management Office (DMO) on their official X handle on Wednesday, forms a crucial part of the government’s broader fiscal strategy to finance the N13 trillion deficit outlined in the 2025 budget.
Beyond addressing the immediate budgetary needs, this bond issuance presents significant investment avenues for a diverse range of participants, from large institutional investors to discerning individuals seeking stable returns. Furthermore, it underscores the government’s commitment to leveraging the domestic debt market as a key instrument in funding critical infrastructure projects across the nation, particularly in the face of ongoing global economic uncertainties.
The DMO has scheduled the auction for April 28, 2025, with the settlement date slated for April 30, 2025. This swift timeline ensures that successful bidders can promptly finalize their investments and begin accruing interest. The auction will feature a strategic combination of reopened bonds, a deliberate approach designed to cater to varying investor preferences and risk appetites.
The specific offerings include:
- A five-year bond originally issued in April 2029, carrying an attractive coupon rate of 19.30 per cent. The government aims to raise N200 billion through this offering.
- A nine-year bond first issued in May 2033, featuring a compelling coupon rate of 19.89 per cent, with a target subscription of N150 billion.
These bonds are structured to be accessible, with units available at a minimum of N1,000. However, the minimum subscription for participation in the auction is set at N50,001,000, with subsequent subscriptions allowed in increments of N1,000. This structure allows for both significant institutional investment and participation from high-net-worth individuals.
One of the key attractions of these Federal Government bonds is the provision for semi-annual interest payments, offering investors a consistent income stream throughout the bond’s tenure. Upon maturity, investors are guaranteed a full lump-sum repayment of their principal.
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Adding to their appeal, the DMO highlighted significant tax advantages associated with these investments. “Tax exemptions under the Company Income Tax Act and the Personal Income Tax Act apply to the bonds,” the statement noted, making them particularly enticing for pension funds, insurance companies, and other approved institutional investors seeking tax-efficient avenues for capital deployment.
The bonds are listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, ensuring liquidity and ease of trading for investors who may wish to buy or sell their holdings before maturity. Moreover, these bonds are recognized as liquid assets, enabling financial institutions to utilize them to meet their statutory liquidity ratio requirements.
Perhaps the most significant factor bolstering investor confidence is the backing of these bonds by the full faith and credit of the Federal Government of Nigeria. This explicit government guarantee, charged upon the nation’s general assets, provides a crucial layer of security, positioning these bonds as a relatively low-risk investment option within the Nigerian financial landscape. The combination of reliable semi-annual interest payments and the government’s commitment to repayment offers a stable and predictable return for investors seeking fixed-income assets in an often-volatile market.
Prospective investors eager to participate in this significant bond auction are required to submit their subscriptions through authorised Primary Dealer Market Makers (PDMMs). The DMO has listed several prominent financial institutions as authorized dealers, including Access Bank, Zenith Bank, Stanbic IBTC Bank, and United Bank for Africa. This established network of PDMMs ensures a transparent and efficient process for participation in the auction.
As Nigeria navigates its economic landscape, this strategic foray into the domestic debt market serves a dual purpose: addressing critical funding needs while simultaneously fostering investment opportunities within the nation. The success of this April bond auction will be closely watched as a key indicator of investor confidence and the overall health of Nigeria’s domestic financial market.
