FG Raises N8.4tn via Bond Market as Stop Rate on 15-Year Hits 17.19%

Kayode Tokede 

In a bid to bridge its budget deficit, the federal government through the Debt Management Office (DMO), raised an estimated N8.4 trillion via the FGN Bond between January 2026 and October 2026.  

According to the FGN bond auction result obtained by THISDAY, the government during the period, offered to raise N10.1 trillion through the market with the intention of financial critical projects in Nigeria’s economy. 

The high demand for the FGN Bond saw subscription hit N15.5 trillion, heled by large institutional investors demand on the back of high interest rates.  

The FGN Bond  auction comes against a backdrop of sustained government reliance on the domestic debt market to fund fiscal obligations amid constrained external financing conditions.

Investor participation was broad-based, but demand was heavily skewed toward the long end of the curve, reflecting continued preference for higher yields in a tight monetary environment.

However, the latest auction results show strong but selective demand across the three instruments, with the 15-year paper dominating subscriptions.

At the FGN bond auction for the month of October 2026, the DMO reopened the FEB 2034, SEP-2036 and JUN-2038 bonds, offering a total of N1.75 trillion. 

Total demand settled at N1.75 trillion (bid-to-offer: 1.0x), with the DMO eventually allotting N1.21 trillion (bid-to-cover: 1.4x).  

The stop rates on the SEP-2036 and JUN-2038 bonds, which were on-the-run at the previous auction, expanded by 50basis points  and 34 basis points  to settle at 17.29 per cent and 17.19 per cent, respectively. The FEB-2034 bond settled at 16.99 per cent.

The amount offered by DMO increased from N1trillion in September 2026 to N1.75 trillion reported in October 2026,  about 75 per cent which is  part of a N5.75 trillion fourth‑quarter (Q4) 2026 bond programme. 

DMO planned offers will be conducted across three auction dates in October, November and December, with the largest monthly amount scheduled for November and December at N2 trillion each.

The FGN Bond recorded a  subscription of  N1.74 trillion in in October 2026, representing an increase of 16.9 per cent from N1.49 trillion in September 2026, while total amount allocated moved from N748.64billion in September 2026 to N1.22trillion in  October 2026. 

The N15.5 trillion total subscription in the 10 months of 2026  by investors is a reflection that investors, most especially the Pension Fund Administrators (PFAs) tend to invest in risk-free instruments, of which FGN Bond and Nigerian Treasury Bills (NTB) offer to the investing public. 

PFAs have played a critical role in partaking in the FGN bond market. Since the beginning of the year, the DMO continually re-opened some FGN Bonds amid modest interest rates in its moves to attract investors.  

Analysts attributed the strong demand for FGN bonds to modest  yields, stressing that the over-subscription also revealed that investors have confidence in the federal government’s ability to meet its debt obligations.

The appetite for FGN bonds indicates that PFAs, and Nigerian investors prefer investment instruments with less volatility that assures them of their capital returns albeit with low yield on investment.

Finance analysts attributed the strong demand for FGN bonds to modest  yields, stressing that the over-subscription also revealed that investors have confidence in the federal government’s ability to meet its debt obligations. 

In recent years, Nigeria’s rising debt profile has been a topic of concern, as Vice President, Highcap Securities Limited, Mr. David Adnori, warned that the country’s debt levels are unsustainable.

Nigeria’s public debt stock stood at N166.79 trillion as of June 30, 2026, up from N159.35 trillion at the end of March, according to figures by DMO. 

Domestic debt accounted for N91.59 trillion, representing 54.91per cent of the total debt portfolio.

The planned N5.75 trillion in fourth-quarter bond offers would add to the federal government’s borrowing programme, although the provisional calendar remains subject to revision.