Nigeria’s Bond Market Slows as Govt Cuts Borrowing — Subscription Falls to ₦4.94 Trillion
Nigeria’s bond market witnessed a slowdown in the first eight months of 2025, as investor subscription to FGN bonds dropped to ₦4.94 trillion, down 12.5% from ₦5.64 trillion in the same period of 2024.
The decline follows the Federal Government’s deliberate reduction in domestic borrowing, aimed at curbing debt accumulation amid soaring interest rates and growing public concern about Nigeria’s rising debt profile.
Key Highlights:
1. Subscription Down:
• 2025 (Jan–Aug): ₦4.94 trillion
• 2024 (Jan–Aug): ₦5.64 trillion
2. Offerings Cut:
• FG offered just ₦2.13 trillion worth of bonds (59% lower than ₦5.15 trillion in 2024).
3. Allotments Reduced:
• ₦4.23 trillion allotted in 2025 (11% drop from ₦4.73 trillion in 2024).
4. Rising Cost of Borrowing:
• January 2025 bond rates surged to 21.79% – 22.60%, compared to 15% – 16.50% in January 2024.
5. August 2025 Auction:
• Govt raised ₦136.16 billion via 5-year and 7-year bonds.
• The 7-year bond (18% marginal rate) drew stronger investor demand.
⚖️ Why the Shift?
• The Tinubu administration seeks to balance immediate financing needs with long-term debt sustainability.
• Nigeria’s medium-term debt strategy (2024–2027) targets:
• Debt-to-GDP ratio capped at 60% (vs 52.25% in Dec 2024).
• Domestic-to-external debt mix revised to 55:45 (vs 48:52 earlier).
• At least 75% long-term instruments to ensure stability.
What Analysts Are Saying:
• CFG Advisory: Nigeria’s debt servicing (₦16.3 trillion in 2025) is unsustainable, now exceeding total budgets for defence, education, health, and infrastructure combined.
• Coronation Research: If inflation eases in late 2025, the CBN may cut interest rates, triggering a bond market rally and possible naira stability.
• Investor Appetite Strong: Despite reduced supply, demand from pension funds and institutional investors remains high, especially for long-term bonds.
The Bigger Picture:
• Nigeria’s total debt has crossed $100 billion, with rising servicing costs eating into fiscal resources.
• Critics argue that subsidy savings are being used for debt servicing instead of infrastructure and growth-stimulating projects.
• Nigeria’s GDP has shrunk to $195 billion, now 4th in Africa, behind South Africa, Egypt, and Algeria.
✅ Takeaway:
The federal government’s moderate borrowing stance shows caution in an era of high interest rates. While subscription has dipped, investor demand for long-term, high-yield bonds remains strong. However, the real challenge lies in managing debt sustainably, reducing reliance on borrowing, and refocusing funds toward productive investments that can revive growth.
Nigeria’s bond market witnessed a slowdown in the first eight months of 2025, as investor subscription to FGN bonds dropped to ₦4.94 trillion, down 12.5% from ₦5.64 trillion in the same period of 2024.
The decline follows the Federal Government’s deliberate reduction in domestic borrowing, aimed at curbing debt accumulation amid soaring interest rates and growing public concern about Nigeria’s rising debt profile.
Key Highlights:
1. Subscription Down:
• 2025 (Jan–Aug): ₦4.94 trillion
• 2024 (Jan–Aug): ₦5.64 trillion
2. Offerings Cut:
• FG offered just ₦2.13 trillion worth of bonds (59% lower than ₦5.15 trillion in 2024).
3. Allotments Reduced:
• ₦4.23 trillion allotted in 2025 (11% drop from ₦4.73 trillion in 2024).
4. Rising Cost of Borrowing:
• January 2025 bond rates surged to 21.79% – 22.60%, compared to 15% – 16.50% in January 2024.
5. August 2025 Auction:
• Govt raised ₦136.16 billion via 5-year and 7-year bonds.
• The 7-year bond (18% marginal rate) drew stronger investor demand.
⚖️ Why the Shift?
• The Tinubu administration seeks to balance immediate financing needs with long-term debt sustainability.
• Nigeria’s medium-term debt strategy (2024–2027) targets:
• Debt-to-GDP ratio capped at 60% (vs 52.25% in Dec 2024).
• Domestic-to-external debt mix revised to 55:45 (vs 48:52 earlier).
• At least 75% long-term instruments to ensure stability.
What Analysts Are Saying:
• CFG Advisory: Nigeria’s debt servicing (₦16.3 trillion in 2025) is unsustainable, now exceeding total budgets for defence, education, health, and infrastructure combined.
• Coronation Research: If inflation eases in late 2025, the CBN may cut interest rates, triggering a bond market rally and possible naira stability.
• Investor Appetite Strong: Despite reduced supply, demand from pension funds and institutional investors remains high, especially for long-term bonds.
The Bigger Picture:
• Nigeria’s total debt has crossed $100 billion, with rising servicing costs eating into fiscal resources.
• Critics argue that subsidy savings are being used for debt servicing instead of infrastructure and growth-stimulating projects.
• Nigeria’s GDP has shrunk to $195 billion, now 4th in Africa, behind South Africa, Egypt, and Algeria.
✅ Takeaway:
The federal government’s moderate borrowing stance shows caution in an era of high interest rates. While subscription has dipped, investor demand for long-term, high-yield bonds remains strong. However, the real challenge lies in managing debt sustainably, reducing reliance on borrowing, and refocusing funds toward productive investments that can revive growth.