Nigeria’s October 2025 bond auction showed that investor appetite for Federal Government securities remains robust even as rates trend lower.
Data from the Debt Management Office (DMO) revealed that the five-year FGN AUG 2030 bond cleared at 15.83 percent compared with 16.00 percent in September, while the seven-year FGN JUN 2032 note cleared at 15.85 percent, down from 16.20 percent a month earlier.
Ordinarily, such a decline in yields might discourage participation, but demand remained strikingly high.
The seven-year paper recorded subscriptions worth N1.06 trillion in October, slightly higher than the N1.03 trillion received in September, confirming that investors are willing to bid aggressively for government paper even at thinner margins.
The five-year note also recorded strong, if softer, interest, with bids totalling N212.66 billion in October compared with N231.79 billion in September. The results shows the perception of sovereign debt as one of the safest and most liquid assets in the market.
Heavy demand at lower rates also signals deep system liquidity and the willingness of investors to accept reduced returns in exchange for stability.
Allotments cut despite trillion-naira subscriptions
Although demand was overwhelming, the DMO scaled back on the amount allotted. In September, the government allotted N576.62 billion across the two instruments, but in October, this fell to N313.77 billion, a steep 45.6 percent decline.
- The cutback was most pronounced on the seven-year bond. While subscriptions crossed the trillion-naira mark, the DMO accepted only N225.97 billion compared with N488.83 billion in the previous month. An additional N3 billion was allotted via the non-competitive window, but this was marginal when set against total bids.
- By contrast, allotments on the five-year note remained unchanged at N87.80 billion despite weaker subscription levels. This selective reduction shows the government’s effort to manage its borrowing programme carefully.
By lowering allotments at a time of strong demand, the DMO effectively kept debt service costs in check while still satisfying part of market appetite. The move also suggests that the government is exercising caution over its rising debt stock, choosing not to over-leverage even when investor funds are readily available.
What you should know
In September 2025, the Central Bank of Nigeria (CBN) announced a reduction in the Monetary Policy Rate (MPR), which was its first rate cut since 2020. On September 23, the Monetary Policy Committee (MPC) reduced the benchmark MPR from 27.5% to 27%, marking a tentative pivot after two years of aggressive tightening.
The decision came on the back of sustained disinflation, with headline inflation easing for six consecutive months to 18.02% in September.
Nairametrics observed that the October results highlight a critical trend in Nigeria’s domestic bond market. Demand continues to outstrip supply by a wide margin, keeping subscription levels elevated and applying downward pressure on yields.
Total subscriptions across both tenors rose slightly to N1.27 trillion in October from N1.26 trillion in September, as the government raised its offer size from N200 billion to N260 billion.
The persistence of trillion-naira bids for the seven-year tenor signals investor confidence in sovereign debt as a reliable store of value amid economic uncertainty. Looking ahead, this mismatch between supply and demand suggests further yield compression is likely, especially if liquidity remains high and the government maintains its restrained issuance strategy.
