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

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

• Separate non-competitive allocations accounted for ₦850 billion.

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

• Bids for that security increased by 15.4% from August.

September 17, () – Nigeria allotted approximately ₦1.60 trillion in government bonds at its September auction, securing additional long-term financing as investors accepted a lower yield on debt maturing in June 2038.

Competitive allotments accounted for ₦748.64 billion, with another ₦850 billion allocated through non-competitive subscriptions. Together, these represent the face value of bonds allotted, rather than a separately disclosed total of cash received.

Investors submitted approximately ₦1.495 trillion in competitive bids against a ₦1 trillion offer at the September 14 auction. The new ten-year bond cleared at 16.79%, while the reopened June 2038 security cleared at 16.85%.

More Borrowing at a Lower Yield

For the government, the improvement was clearest on the 2038 bond, whose yield fell from 17.79% at August’s auction.

Subscriptions for that security increased from ₦821.32 billion to ₦947.83 billion, approximately 15.4%, even though the amount offered declined from ₦750 billion to ₦600 billion. Investors sought more of the bond and successful bidders accepted a lower return at the auction price.

Lower yields improve the price at which government can sell additional debt. However, each sale still carries future interest payments and a principal repayment obligation.

September’s allotments also cannot be treated as an equivalent increase in Nigeria’s outstanding debt without accounting for repayments elsewhere. An auction result shows debt issued through that sale, not the net movement in the country’s total borrowing.

Existing Interest Payments Stay Intact

The reopened 2038 bond retains its original 15.45% coupon, while the new September 2036 bond carries a 16.79% coupon. Settlement was scheduled for September 16.

A coupon determines contractual interest payments on a bond’s face value. Yield also reflects the price an investor pays, which explains why the 2038 bond can retain its coupon while offering a different return at successive auctions.

Consequently, September’s lower yield does not reduce the interest promised to existing holders or automatically cut the government’s overall debt-service bill.

Expectations of softer inflation, available investment cash and changing portfolio preferences could help explain the bidding. The results alone do not identify the cause, and total subscriptions across September’s two securities were below August’s approximately ₦1.727 trillion across three.

Further declines in auction and secondary-market yields would strengthen the evidence that Nigeria can obtain financing on better terms. How much relief that provides will also depend on how much it continues to borrow and the obligations falling due.