The Debt Management Office (DMO) seems to have started the year 2025 on a good note with an impressive response in its first auction of the year.

With a domestic funding target of N7.4 trillion targeted to plug the 2025 budget deficit, the DMO conducted its first monthly primary market auction in 2025 last week as the agency offered N450 billion worth of FGN papers to investors, split across three papers; April 2029 – N100 billion, February 2031 – N150 billion and January 2035 paper –N200 billion.

The amount, according to analysts at FBNQuest, it sought to raise at this auction was higher than the N360 billion offered at its auction held in the year-earlier period, underscoring the government’s increased borrowing needs this year. The total sales figure amounted to N606.5 billion, implying a sales-to-offer ratio of 1.35x.

The subscription level, an indicator of investor participation, stood at N606.5 billion, resulting in a bid-to-offer ratio of 1.49x.The robust investor appetite for government debt instruments is primarily driven by elevated yields resulting from the CBN’s tight monetary stance.

Toputintoperspective, marginalrates for the reopened February 2031 and February 2034 instruments settled at 21.79 per cent and 22.50 per cent, respectively, higher than the rates of 21.14 per cent and 22.00 per cent it sold for in the previous auction, while the stop rate for the newly opened January 2025 paper closed at 22.60 per cent.

The DMO raised around N5.1 trillion in 2024 through its regular monthly auctions, helping to bridge the 2024 domestic funding need of about N6.1 trillion envisaged in the 2024 budget document.

Given the challenges with raising revenue collections and the relatively tight external financial conditions in recent years, the domestic debt market has been the reliable source of funding options to address persistent budget shortfalls.

Looking ahead, analysts at FBNQuest said the DMO is expected to maintain an aggressive borrowing plan this year due to its domestic funding target of N7.4 trillion in a bid to plug the 2025 budget deficit.

https://independent.ng/2025-budget-deficit-dmo-quest-to-plug-n7-4trn-funding-target/