Investor Demand Rises as FG Bond Auction Records Stronger Participation
Interest in Federal Government bonds improved significantly in February, as Nigeria’s bond auction recorded stronger investor participation and declining yields, signalling growing confidence in government debt instruments.
Here is a detailed breakdown of the development.
Federal Government Offered ₦800 Billion in Bonds
Nigeria’s Debt Management Office (DMO) offered ₦800 billion worth of Federal Government bonds during its February auction.
This was slightly lower than the ₦900 billion offered in January, but the auction still attracted strong investor interest.
Total Investor Demand Reached ₦739 Billion
Investors submitted ₦739 billion in bids for the bonds.
This represents:
• An increase from ₦715 billion recorded in January
• Continued demand for government debt instruments
Although bids increased, the government accepted only ₦524.3 billion from investors.
Bid-to-Cover Ratio Improved to 0.92
The bid-to-cover ratio, which measures demand relative to supply, rose to:
0.92 in February
This is an improvement from:
0.79 recorded in January
A higher ratio means stronger demand from investors for government bonds.
Bond Yields Dropped Sharply
The domestic bond market ended February on a bullish note, as yields declined significantly.
Average yields dropped by:
570 basis points to 15.54%
Lower yields usually indicate:
• higher demand for bonds
• rising bond prices
• stronger investor confidence.
Investors Focused on Long-Term Bonds
Market operators noted that investors showed strong preference for long-dated bonds, as they attempted to lock in attractive returns before possible interest rate reductions.
Key bonds offered during the auction include:
10-Year Bond (Due February 2034)
• Subscriptions: ₦972.9 billion
• Marginal rate: 15.5%
9-Year Bond (Due May 2033)
• Subscriptions: ₦879.69 billion
• Marginal rate: 15.74%
7-Year Bond (Due June 2032)
• Subscriptions: ₦188.14 billion
• Marginal rate: 15.74%
The strong interest in longer tenors helped drive prices higher in the secondary market.
Institutional Investors Boosted Demand
The rally in the bond market was supported by stronger participation from:
• pension fund administrators
• asset management firms
• institutional investors
These investors are increasingly adjusting portfolios toward longer-term securities to secure stable returns.
Nigeria’s Eurobonds Also Recorded Strong Performance
Positive sentiment was not limited to the domestic market.
Nigeria’s Eurobond market also experienced stronger investor demand.
During the month:
• Average yields dropped by 1.27 percentage points
• Yields settled at 6.98%
This decline indicates renewed confidence from international investors in Nigeria’s external debt outlook.
Why Investors Are Turning to Bonds
According to Mike Ezeh, Managing Director of Crane Securities Limited, investors are increasingly favouring debt instruments because they provide:
• attractive returns
• capital protection
• predictable income
He noted that many traditional money market instruments are becoming less attractive due to frequent interest rate adjustments by regulators.
What This Means for the Market
The improved demand for government bonds suggests:
• growing investor confidence in fixed-income assets
• a shift toward long-term securities
• expectations that interest rates could moderate in the future.
Despite tight liquidity conditions in the domestic market, investors continue to prioritise safety and stable returns in government-backed securities.
Interest in Federal Government bonds improved significantly in February, as Nigeria’s bond auction recorded stronger investor participation and declining yields, signalling growing confidence in government debt instruments.
Here is a detailed breakdown of the development.
Federal Government Offered ₦800 Billion in BondsNigeria’s Debt Management Office (DMO) offered ₦800 billion worth of Federal Government bonds during its February auction.
This was slightly lower than the ₦900 billion offered in January, but the auction still attracted strong investor interest.
Total Investor Demand Reached ₦739 BillionInvestors submitted ₦739 billion in bids for the bonds.
This represents:
• An increase from ₦715 billion recorded in January
• Continued demand for government debt instruments
Although bids increased, the government accepted only ₦524.3 billion from investors.
Bid-to-Cover Ratio Improved to 0.92The bid-to-cover ratio, which measures demand relative to supply, rose to:
0.92 in February
This is an improvement from:
0.79 recorded in January
A higher ratio means stronger demand from investors for government bonds.
Bond Yields Dropped SharplyThe domestic bond market ended February on a bullish note, as yields declined significantly.
Average yields dropped by:
570 basis points to 15.54%
Lower yields usually indicate:
• higher demand for bonds
• rising bond prices
• stronger investor confidence.
Investors Focused on Long-Term BondsMarket operators noted that investors showed strong preference for long-dated bonds, as they attempted to lock in attractive returns before possible interest rate reductions.
Key bonds offered during the auction include:
10-Year Bond (Due February 2034)
• Subscriptions: ₦972.9 billion
• Marginal rate: 15.5%
9-Year Bond (Due May 2033)
• Subscriptions: ₦879.69 billion
• Marginal rate: 15.74%
7-Year Bond (Due June 2032)
• Subscriptions: ₦188.14 billion
• Marginal rate: 15.74%
The strong interest in longer tenors helped drive prices higher in the secondary market.
Institutional Investors Boosted DemandThe rally in the bond market was supported by stronger participation from:
• pension fund administrators
• asset management firms
• institutional investors
These investors are increasingly adjusting portfolios toward longer-term securities to secure stable returns.
Nigeria’s Eurobonds Also Recorded Strong PerformancePositive sentiment was not limited to the domestic market.
Nigeria’s Eurobond market also experienced stronger investor demand.
During the month:
• Average yields dropped by 1.27 percentage points
• Yields settled at 6.98%
This decline indicates renewed confidence from international investors in Nigeria’s external debt outlook.
Why Investors Are Turning to BondsAccording to Mike Ezeh, Managing Director of Crane Securities Limited, investors are increasingly favouring debt instruments because they provide:
• attractive returns
• capital protection
• predictable income
He noted that many traditional money market instruments are becoming less attractive due to frequent interest rate adjustments by regulators.
What This Means for the Market
The improved demand for government bonds suggests:
• growing investor confidence in fixed-income assets
• a shift toward long-term securities
• expectations that interest rates could moderate in the future.
Despite tight liquidity conditions in the domestic market, investors continue to prioritise safety and stable returns in government-backed securities.
