The Central Bank of Nigeria (CBN) is poised to conclude its 2025 sovereign debt program with an ambitious N825 billion fundraising exercise, signaling the Federal Government’s unrelenting appetite for domestic borrowing as it navigates a tight fiscal environment and persistently high interest rates.
The planned issuance, split between N460 billion in Federal Government bonds and N365 billion in Treasury Bills, represents the government’s final tap of the local debt market this year—a market that has been characterized by elevated yields and strong investor demand for naira-denominated assets.
According to the CBN’s issuance calendar, the apex bank will on Monday, December 15, offer two reopened long-dated securities: N230 billion of the 17.945% FGN August 2030 bond and an equal amount of the 17.95% FGN June 2032 bond. Settlement is scheduled for December 17.
The dual offering underscores the government’s strategy of extending debt maturity while locking in financing at current market rates. However, investors should brace for higher borrowing costs compared to previous auctions. Market sources indicate that the expected stop rates—the benchmark yield at which bids are accepted—could range between 17.30% and 17.50% for the 2030 paper, and 17.40% to 17.60% for the 2032 bond.
This represents a significant uptick from the October auction, where the August 2030 bond cleared at 15.90% and the June 2032 paper settled at 16.00%. The upward trajectory in yields reflects broader market dynamics, including persistent inflationary pressures, monetary policy tightening, and investor appetite for higher returns on longer-dated instruments.
On the heels of the bond sale, the CBN will conduct a Treasury Bills auction on Thursday, December 18, targeting N350 billion across three tenors. The breakdown includes N100 billion each for the 91-day and 182-day bills, with the bulk—N165 billion—allocated to the 364-day tenor, which typically attracts institutional investors seeking short-term, low-risk exposure.
The auction will follow the Dutch auction format, a competitive bidding system where successful bidders pay the price they bid rather than a uniform clearing price. Bids must be submitted through the CBN’s S4 web platform between 8:00 a.m. and 11:00 a.m. on December 17, with a minimum subscription threshold of N50.001 million and bids required in multiples of N1,000. Settlement is due by 11:00 a.m. the following day.
Notably, the CBN has reserved the right to adjust the offered amounts based on “prevailing market realities”—a standard but significant caveat that gives policymakers room to respond to demand fluctuations, liquidity conditions, or strategic fiscal considerations. This flexibility could result in either a scaling up of the auction if demand proves robust, or a reduction if market absorption appears constrained.
The December auctions cap off a year in which the Federal Government has leaned heavily on domestic debt markets to finance its budget deficit, fund critical infrastructure, and service existing obligations. With external borrowing constrained by global interest rate dynamics and currency pressures, the domestic market has emerged as the government’s primary funding lifeline.
However, the sustained issuance at elevated yields has raised concerns among economists about the crowding-out effect on private sector credit and the long-term sustainability of the debt servicing burden. As yields hover in the mid-to-high teens, the cost of borrowing continues to climb, posing fiscal risks as debt service obligations consume an increasing share of government revenue.
Investors, meanwhile, remain keen on naira assets, buoyed by attractive real returns and relative stability in the fixed income space. The outcome of next week’s auctions will offer fresh insights into market sentiment and the government’s ability to sustain its borrowing program into 2026.
Auction Details:
– Bond Auction: Monday, December 15, 2025 | Settlement: December 17
– T-Bills Auction: Thursday, December 18, 2025 | Bid Submission: December 17, 8:00–11:00 a.m.
WHAT YOU SHOULD KNOW
The Federal Government is closing out 2025 with an N825 billion borrowing spree—its final debt auction of the year—but it’s coming at a steep cost. Bond yields are climbing sharply, with expected rates hitting 17.3–17.6%, up from 15.9–16% just months ago. This signals two critical realities: Nigeria’s heavy reliance on domestic borrowing continues unabated, and the cost of servicing that debt is rising fast.
For investors, it’s an opportunity for high returns; for taxpayers, it means more government revenue will go toward paying interest rather than funding development. The real question heading into 2026: how long can this borrowing binge be sustained at these elevated rates?
