By Boluwatife Oshadiya | August 26, 2026
Key Points
- Federal Government raises N7.62 trillion through eight FGN bond auctions between January and August
- August auction attracts N1.7 trillion in subscriptions against N1.1 trillion offered competitively
- Strong investor demand persists as the government balances funding needs with borrowing costs
Main Story
The Federal Government has raised N7.62 trillion from the domestic bond market through eight Federal Government of Nigeria bond auctions between January and August 2026.
The borrowing is being used to support the government’s financing requirements amid a projected 2026 budget deficit of about N31.5 trillion. The latest figures underline the growing role of domestic fixed-income markets in funding government expenditure.
At the August auction, the Debt Management Office (DMO) allotted N805.2 billion through competitive bids across bonds maturing in January 2035, April 2037 and June 2038. Total allotments rose to about N1.56 trillion after N752.3 billion was sold through non-competitive allotments, according to Cowry Asset Management Limited.
Investor demand remained strong, with subscriptions reaching N1.7 trillion and producing a bid-to-cover ratio of 2.1 times, compared with 1.9 times at the preceding auction. The June 2038 bond attracted the highest demand, receiving N821.3 billion in bids against N631 billion in competitive allotments, alongside N742.3 billion in non-competitive allotments.
The DMO, however, maintained a cautious approach to pricing. The June 2038 bond recorded a marginal yield of 17.79%, while the January 2035 instrument attracted N513.6 billion in subscriptions but received N64.1 billion in competitive allotments at a marginal yield of 17.15%.
The N7.62 trillion raised through FGN bonds excludes funds obtained through Treasury bills, Sukuk and other debt instruments, indicating that the latest figure represents only part of the government’s domestic financing programme.
What’s Being Said
“The auction results suggested the market experienced a relatively low competitive allotment, driven more by the DMO’s yield considerations than by weak demand.” Cowry Asset Management Limited, investment and research firm.
Market reports indicate that investors continue to compare longer-dated bonds with shorter-term Treasury bills, where yields remain attractive. This has contributed to an inverted yield curve in which some short-term instruments offer higher returns than longer-term securities.
What’s Next
- The DMO is expected to continue using domestic bond auctions as part of the government’s 2026 financing programme
- Investors will monitor future auction yields as inflation moderates and expectations around monetary policy evolve
- Treasury bills and other government securities will continue competing with longer-dated bonds for domestic investor funds
Bottom line
The Bottom Line: Strong demand gives the Federal Government continued access to domestic funding, but the gap between investor yield expectations and the DMO’s pricing stance remains important. The N7.62 trillion raised also shows that domestic borrowing is becoming an increasingly significant component of government financing.
