Nigeria cuts Q3 bond issuance, pivots to short-term T-bills
Nigeria's debt office has reduced its third-quarter bond issuance by up to N500 billion, signaling a strategic pivot toward short-term Treasury bills to meet immediate financing needs.
Nigeria’s Debt Management Office has lowered its planned third-quarter bond issuance to between N3.4 trillion and N4.6 trillion, down from an initial range of N4.2 trillion to N5.1 trillion. The revised calendar, published on July 23, trims offer sizes primarily across the August and September auctions while leaving the July 20 sale largely intact at N1.5 trillion–N2.1 trillion.
The reduction in long-term borrowing contrasts sharply with recent moves in the short-term debt market. Just weeks ago, the debt office expanded its second-quarter Treasury Bill programme by N850 billion, bringing the total to N4.8 trillion. This divergence indicates the government is relying more heavily on short-term instruments to satisfy immediate financing requirements, even as it scales back longer-dated supply.
August’s auction absorbed the deepest cuts, with planned offers falling to N900 billion–N1.1 trillion from N1.2 trillion–N1.6 trillion. The allocation for the 22.60% FGN JAN 2035 bond was slashed to N200 billion–N250 billion, down from an originally planned N600 billion–N800 billion. Additionally, the 16.2499% FGN APR 2037 bond was reintroduced to August at a marginal N50 billion–N100 billion after being excluded entirely from the original schedule. September’s auction was similarly tightened, dropping to a N1.0 trillion–N1.4 trillion range.
Despite the overall supply pullback, the revised schedule introduces structural shifts for fixed-income portfolios. A new 10-year benchmark, the FGN SEP 2036, will debut in September with an offer size of N500 billion–N700 billion. It replaces a planned reopening of the JAN 2035 note, providing asset managers a fresh pricing anchor on the intermediate curve distinct from an aging benchmark.
Simultaneously, the 15.45% FGN JUN 2038 bond has cemented itself as the quarter’s anchor security. Featuring in all three monthly auctions and carrying the heaviest individual allocations, the 15-year original tenor highlights a strategic tilt toward longer-duration debt. Pension funds and bank treasury desks will likely scrutinize demand for this specific paper to measure genuine investor appetite for extended sovereign risk.
The DMO noted that improved liquidity conditions or a reassessment of financing needs may have driven the issuance cuts. However, the office reiterated that the calendar remains provisional and could be amended further depending on evolving fiscal conditions through the rest of the quarter.
