The Federal Government of Nigeria recently conducted its December 2024 bond auction, raising a total of N211.144 billion. This amount marks a significant decrease from the N346.155 billion raised in November. The auction, overseen by the Debt Management Office (DMO) on December 16, 2024, featured the reopening of two existing bonds: the 19.30% FGN APR 2029 (5-Year Bond) and the 18.50% FGN FEB 2031 (7-Year Bond).
Compared to the previous month, the total subscription for the auction saw a sharp decline of 24.56%, totaling N278.82 billion. The subscriptions for both the 5-year and 7-year Bonds also experienced decreases. For the 5-year Bond, subscriptions dropped to N67.457 billion, while the 7-year Bond subscriptions fell significantly to N211.363 billion.
Allotments at the auction also decreased, with only N211.144 billion raised in December. This amount was down by N135.011 billion (39.00%) from the previous month. The number of successful bids also decreased by 50.51%, with only 98 successful bids in December compared to 198 in November.
Despite the decline in participation, marginal rates remained relatively stable. The marginal rate for the 5-year bond rose slightly to 21.14% in December, while the 7-year bond’s marginal rate remained unchanged at 22.00%. This stability suggests continued investor confidence in the government’s debt instruments, even amidst seasonal liquidity constraints and end-of-year cautiousness.
The decrease in subscriptions and allotments could be attributed to various factors, including tighter liquidity towards the end of the year and a cautious borrowing strategy by the government to ensure debt sustainability. However, the stable marginal rates indicate that the Federal Government continues to offer attractive yields, attracting investors even as they navigate evolving economic conditions.
Overall, the December 2024 bond auction reflects a strategic approach by the Nigerian government to manage its debt portfolio and maintain investor confidence. With continued stability in marginal rates and ongoing investor interest, the government’s debt instruments remain an appealing investment option in the Nigerian financial market.
