FG Raises N5.46trn From Bonds In 2024

The federal government last year had through the Debt Management Office (DMO) raised N5.46 trillion from the bond market, a lower figure from N5.72 which it set out to raise in the year 2024 and what it raised in 2023.
In 2023, the government had raised N5.85 trillion from the Federal Government of Nigeria (FGN) Bond, showing a 6.7 per cent decline in what was raised by the government from the bond market. While investors’ interest in the risk-free government bond had been sustained, the government had not raised as much as it had set out to raise.

With a total of N5.72 trillion offered to investors in the course of the year, what the government raised had been 4.5 per cent lower than the amount intended. This is despite a large sum offered by investors for the government papers.

Last year, investors had offered up to N6.52 trillion in the bond market, with the largest subscription by investors being in the month of February when the government set out to raise N2.5 trillion from the market.
In February, subscription had beenN1.902 trillion with the amount allotted for successful bid being N1.494 trillion.

The highest amount raised for the government by the DMO in the course of 2024. Despite the high amount that was raised, the subscription had been lower than what the DMO had set out to raise.
The least amount had been raised in December when the DMO set out to raise N120 billion but ended up raising N211.14 billion despite a N278.82 subscription by investors.

With a budget of N49.7 trillion and a deficit of N13 trillion, the federal government plans to raise N7.4 trillion from the domestic market in 2025. In the Federal Government’s 2025 budget currently before the National Assembly, President Bola Tinubu’s administration plans to spend N16.327 trillion on its debt obligations, out of the proposed expenditure of N49.7 trillion.

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According to the DMO, Nigeria’s debt management strategy conforms with relevant legislation, regulations, and international standards adding that the growing interest in FGN bonds, Sukuk bonds, and other FGN securities reflected Nigeria’s adherence to best practices in debt management.

It had assured stakeholders that sufficient provisions had been made in the current Medium-Term Expenditure Framework, MTEF, running between 2025-2027 and annual budgets to meet the country’s debt service obligations.

The Federal Government’s borrowing, the DMO emphasized, has helped deepen the domestic capital market, which has become very attractive to both local and foreign investors of various status.

Meanwhile, analysts opine that the government is expected to borrow more than it planned to as the revenue projections are deemed to the optimistic. Pointing out that the government plans to raise N7.4 trillion and N1.8 trillion at the domestic and foreign markets to plug a budget deficit of N13.1 trillion in 2025, the analysts at Afrinvest West Africa say they “estimate that domestic borrowing could exceed target, requiring net issuances of N13.7 trillion minimum in 2025.

“Overall, we estimated inflows of N28.5 trillion from maturing bills and coupon payment against outflows via gross paper supply of N37.5 trillion. We also do not rule out the possibility of Eurobonds market outing in 2025. Consequently, we expect significant pressure in the domestic market to intensify, even as Banks would gear-up recapitalisation. Thus, we anticipate a strain on the system liquidity level in the year.”