Nigeria Allots ₦1.6 Trillion in Bonds as Investors Accept Lower Yield on 2038 Debt

• September’s bond allotments totalled approximately ₦1.60 trillion.

• An ₦850 billion non-competitive allocation exceeded the competitive allotment.

• Yield on the June 2038 bond fell to 16.85% from 17.79%.

• Settlement is scheduled for September 16 following Monday’s auction.

September 16, () – Nigeria allotted approximately ₦1.60 trillion in government bonds at its September auction, with more than half allocated outside competitive bidding.

Investors also accepted a lower yield on the reopened June 2038 bond, giving the government more favourable pricing on that borrowing than at August’s auction.

Results from the Debt Management Office show ₦748.64 billion allotted through competitive bidding and another ₦850 billion through non-competitive allocations. Settlement is scheduled for September 16, following the September 14 auction.

The Largest Allocation Sat Outside Competitive Bidding

Competitive subscriptions reached ₦1.495 trillion against an advertised ₦1 trillion offer. About half of those bids, measured by value, received an allotment.

However, the separate non-competitive allocation lifted total allotments above the advertised offer. It accounted for approximately 53% of the combined amount, calculated from the DMO’s figures.

The results do not identify the recipients of those allocations. They also report bond allotments rather than a separate total for cash proceeds received at settlement.

A Lower Yield Leaves Existing Coupons Intact

Yield on the June 2038 bond fell by 0.94 percentage points, from 17.79% in August to 16.85% in September. Competitive demand for that instrument increased to ₦947.83 billion from ₦821.32 billion at the previous auction.

For investors, accepting a lower yield means accepting a lower return at the purchase price, assuming the bond is held to maturity and payments are made as promised.

Existing holders will continue receiving the bond’s original 15.45% coupon. Reopening a bond allows the government to sell additional units at a new price without changing its contractual interest payments.

September’s new ten-year bond, maturing in 2036, carries a 16.79% coupon. Buyers therefore face two different interest-payment structures, even though the auction yields were close.

Lower yields improve pricing for the government on the debt sold at this auction. They do not automatically reduce interest payments on bonds already outstanding.