DMO’s June Bond Auction Attracts 503% Oversubscription

The Debt Management Office (DMO) has reported an overwhelming response to its June 2025 Federal Government of Nigeria (FGN) bond auction, which was oversubscribed by 503 per cent..

The result of the auction, held on June 23, 2025, released on its website showed that two categories of bonds: a N50 billion 5-year FGN April 2029 bond and a N50 billion 7-year FGN June 2032 bond were offered.

Total bids amounted to approximately N602.9 billion against the N100 billion offered, reflecting strong investor appetite for government securities due the high coupon rates of 19.30 per cent and 19.89 per cent respectively.

The allotment result also showed that successful bids were allotted at marginal rates of 17.75 per cent for the 5-year bond and 17.95 per cent for the 7-year bond, slightly below the coupon rates, with allotments totaling about N100 billion.

Demand was particularly skewed toward the longer-dated 2032 tenor. Investors placed N561.2 billion in bids, some 11.2 times the N50 billion offered. This forced the DMO to allocate only N99 billion despite the torrent of interest.

By contrast, the reopened April 2029 tenor drew just N41.7 billion in bids. That fell short of its N50 billion offer, resulting in a mere N1.1 billion allotment.

Secondary markets are also responding to the positive momentum. Bond yields have dropped roughly 42 basis points month-to-date, settling at an average of 18.44 per cent, yielding attractive returns for investors as sentiment shifts.

Market strategists like FBNQuest suggest that continued easing inflation could embolden the DMO to keep future bond supply modest and gradually taper yields. They say if sustained, this could reduce Nigeria’s borrowing costs and support the broader financial market.

This significant oversubscription underscores investor confidence in the Nigerian government’s debt instruments as part of its domestic borrowing strategy to finance the 2025 budget deficit.

The bonds offer semi-annual interest payments and will be redeemed in full upon maturity, providing investors with consistent income and lump sum repayment at the end of the tenure.

This level of oversubscription is a strong indicator of the robust demand for Nigerian sovereign bonds in the current market environment, reflecting investors’ search for attractive yields amid economic uncertainties.