DMO Raises N5.26trn from Bond Market to Support FG Bridge Budget Deficit 

Kayode Tokede

In a bid to bridge the federal government’s budget deficit, the Debt Management Office (DMO) has so far in 2025 raised an estimated N5.26 trillion via the FGN bond market, market data has shown.

The N5.26 trillion raised in 2025 is about a 9.93 per cent drop from N5.84 trillion raised in 2024.

At the start on 2025, the federal government projected to borrow approximately N13 trillion from FGN bonds to finance its projected budget deficit, with a significant portion expected to be raised in the first half through a mix of new and re-opened bonds.

Analysis of the monthly FGN bond auction from the debt office official website revealed that in the first quarter of 2025, about N1.94 trillion was raised and in the second quarter of 2025, the debt office raised N921.59 billion.

The amount raised in Q3 2025 stood at N898.72 billion and in fourth quarter 2025, the total allotment of DMO is about N1.51 trillion.

Also, the monthly auction revealed that investors’ total subscription to FGN bonds in 2025 stood at  N8.96 trillion, about 26.4 per cent increase when compared to N7.09 trillion total subscription  in 2024.

The N8.96 trillion total subscription  by investors is a reflection that investors, most especially the Pension Fund Administrators (PFAs) tend to invest in risk-free instruments, of which FGN Bond and Nigerian Treasury Bills (NTB) offer to the investing public.

As gathered by THISDAY, PFAs have played a critical role in partaking in the FGN bond market.

The pension funds industry portfolio in the FGN Bonds (HTM) increased to N13.88 trillion as of October 2025, a report by the National Pension Commission (NAICOM) revealed.

Also, NAICOM revealed that FGN Bonds (AFS) stood at N1.26trillion.

Of the N26.66 trillion  pension funds industry portfolio exposure, FGN Bonds contributed N15.15 trillion or 56.81 per cent as of October 2025.

Also, the modest   participation in 12 months of 2025 auction suggests that large institutional investors, such as pension funds and asset managers, had excess liquidity to deploy, further compressing yields.

The DMO, between January-December 2025, sought to raise N3.51 trillion from investing public, representing 38.6 per cent drop from N5.72trillion in 2024.

THISDAY also gathered that the DMO, since the beginning of the year, has continually re-opened some FGN Bonds and steadily hiked its interest rate to attract investors amid the double-digit inflation rate and lucrative returns in the stock market.

Finance analysts attributed the strong demand for FGN bonds to attractive yields, which offer investors high returns on their investments, stressing that the over-subscription also revealed that investors have confidence in the federal government’s ability to meet its debt obligations.

The appetite for FGN bonds indicates that PFAs, and Nigerian investors prefer investment instruments with less volatility that assures them of their capital returns albeit with low yield on investment.

“So, investors expect higher yield for this particular issuance, while the government does not wish to borrow at a higher interest rate,” said an investment banker & stockbroker, Mr. Tajudeen Olayinka.

In recent years, Nigeria’s rising debt profile has been a topic of concern, as Vice President, Highcap Securities Limited, Mr. David Adnori, warned that the country’s debt levels are unsustainable.

The DMO had maintained that the robust subscription levels highlight continued investor confidence in the government’s debt instruments, driven by attractive yields and Nigeria’s stable credit ratings.

Meanwhile, analysts linked the strong demand for FGN bond to attractive yield, which offers investors high returns on their investments, stressing that the oversubscriptions also revealed that investors have confidence in the federal government’s ability to meet its debt obligations.