FG Targets N1.8tn from Bond Market in Q1, Introduces Two Savings Bonds

The Federal Government of Nigeria plans to raise N1.8 trillion from the bond market in the first quarter of 2025 to support budgetary funding and address infrastructure needs. The Debt Management Office (DMO) disclosed that the government will issue Federal Government Bonds and savings bonds, including two newly introduced savings bonds with competitive interest rates.

According to the DMO, the new savings bonds offer annual interest rates of 18% and 23%, providing an attractive investment opportunity for individuals and institutions. These bonds are part of efforts to deepen Nigeria’s domestic debt market and offer citizens a secure way to earn high returns on investments.

The government plans to raise funds through various bond categories, with tenors ranging from 2 to 10 years. The introduction of the savings bonds aims to encourage public participation in government borrowing while boosting financial inclusion. Investors can access these bonds through licensed stockbrokers, with monthly interest payouts ensuring a steady income stream.

The DMO stated that the bond issuance is necessary to finance capital projects and ensure budget execution for the fiscal year. It emphasized that the funds will be allocated toward critical sectors, including education, health, transportation, and power. This aligns with the government’s broader economic strategy to stimulate growth and reduce the infrastructure deficit.

Market analysts have expressed optimism about the government’s decision, citing the attractive interest rates as a means to draw more investors. However, concerns remain over Nigeria’s rising debt profile, which hit N87.5 trillion in December 2024. Critics argue that while the bonds may provide temporary relief, they could increase debt servicing costs, placing further strain on the nation’s finances.

Financial experts have also highlighted the potential benefits for retail investors. The bonds offer a low-risk investment alternative with guaranteed returns, making them suitable for small-scale investors. Moreover, the inclusion of savings bonds in the offering broadens access to government securities, enabling more Nigerians to participate in national development.

To enhance transparency, the DMO has pledged to publish regular updates on the utilization of the funds raised. This measure is expected to reassure investors and boost confidence in government securities.

As the first quarter unfolds, the success of the bond issuance will depend on investor appetite and market conditions. Analysts are closely watching how the government balances borrowing with fiscal discipline to sustain economic stability.