According to a recent circular released by the DMO, the offer comprises two bonds: a N100 billion FGN JUL 2030 bondand a reopening of the N100 billion FGN JUN 2032 seven-year bond.

The FGN JUL 2030 bond has a five-year tenor and will mature in August 2030, while the reopened seven-year bond will mature in June 2032 at a coupon rate of 17.95%.

The auction is scheduled for August 25, 2024, with a settlement date of August 27, 2024.

Each bond is priced at N1,000 per unit, subject to a minimum subscription of N50,001,000, and in multiples of N1,000 thereafter.

For reopened issues where coupon rates are already fixed, the DMO explained that successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume on offer, including any accrued interest. Interest payments on the bonds will be made semi-annually.

The bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged on its general assets, guaranteeing investors both interest payments and repayment of principal at maturity.

The DMO advised interested investors to submit their bids through any of the authorised Primary Dealer Market Makers (PDMMs), which include: Access Bank Plc, First Bank of Nigeria Ltd, Stanbic IBTC Bank Ltd, Citibank Nigeria Ltd, First City Monument Bank Plc, Standard Chartered Bank Nigeria Ltd, Coronation Merchant Bank Ltd, FSDH Merchant Bank Ltd, United Bank for Africa Plc, Ecobank Nigeria Ltd, FBNQuest Merchant Bank Ltd, Rand Merchant Bank Nigeria Ltd, and Guaranty Trust Bank Ltd.

The surge is an increase of ₦8.02 trillion compared to the ₦134.3 trillion recorded three months earlier. This resulted from exchange rate fluctuations, growing domestic borrowing, and Nigeria’s fiscal policy directions.

The country’s debt stock consists of external and domestic borrowings undertaken by the Federal Government, state governments, and the Federal Capital Territory (FCT). 

External and Domestic Debt Split

External debt accounts for ₦68.89 trillion ($43.03 billion), 48.4% of the total debt stock. This showed the rate at which Nigeria relies on foreign loans to fund development projects and address budget deficits. 

Meanwhile, domestic debt stands at ₦73.43 trillion ($45.87 billion), contributing 51.6% of the overall figure. The Federal Government alone is responsible for ₦69.22 trillion ($43.23 billion) of the domestic debt, while state governments and the FCT owe ₦4.21 trillion ($2.63 billion).

Debt Growth and Exchange Rate Impact

From June to September 2024, Nigeria’s debt increased by ₦8.02 trillion (5.97%), driven by high domestic borrowing and the depreciation of the naira against the US dollar. 

The exchange rate weakened from ₦1,470.19/$ in June to ₦1,601.03/$ in September, amplifying the naira value of external obligations. While external debt in dollar terms grew marginally by 0.29%, its naira equivalent surged by 9.22%.

Composition of Domestic Debt

Federal Government bonds were the largest domestic debt component, growing by 4.47% to ₦54.65 trillion. Other components include Nigerian Treasury Bills, which declined slightly to ₦11.73 trillion, and promissory notes, which increased to ₦1.77 trillion. 

Retail-focused instruments like Federal Government Savings Bonds also recorded growth, reflecting increased participation from smaller investors.

External Debt Profile

External debt, valued at $43.03 billion, is primarily composed of multilateral loans, which account for 50.6% of the total and increased slightly to $21.77 billion. Obligations to bilateral lenders, including China and France, declined marginally, while commercial loans, such as Eurobonds, remained steady at $15.12 billion. 

The issuance of a $2.2 billion Eurobond in December 2024 further expanded Nigeria’s external debt, aimed at funding the national budget.

The DMO’s report revealed Nigeria’s increased reliance on borrowing to finance budget deficits and support development projects. While domestic borrowing has grown, external loans remain essential to fund infrastructure and social initiatives.

However, the rapid depreciation of the naira, coupled with mounting debt obligations, is limiting debt sustainability. Rising debt servicing costs, declining oil revenues, and high inflation rates further compound the fiscal challenges.

Initiatives to moderate short-term domestic borrowing are evident, with reductions in Treasury bills and Sukuk. Nonetheless, Nigeria’s issuance of its first domestic dollar-denominated bond added ₦1.47 trillion to the debt stock, pointing to the need for innovative funding mechanisms.