Strong Demand Pushes DMO Bond Auction To ₦1.54 Trillion Allocation

The Debt Management Office (DMO) raised a total of ₦1.54 trillion at its January bond auction, reflecting strong investor appetite for naira-denominated assets at the first local debt sale of 2026.

The auction featured a total offer size of ₦900 billion across reopened 7-year and 10-year Federal Government of Nigeria (FGN) bonds. Market analysts observed that the government appears set to maintain its strategy of frontloading domestic borrowing, consistent with recent trends amid widening fiscal pressures.

Investor demand significantly outpaced supply, with total subscriptions reaching ₦2.50 trillion. The JAN 2034 FGN bond recorded particularly strong interest, underscoring investor preference for medium- to long-dated instruments.

At the auction, the DMO offered ₦300 billion of the 18.50% FGN FEB 2031 bond, ₦400 billion of the 9.00% FGN FEB 2034 bond, and targeted ₦200 billion from the 22.60% FGN JAN 2035 bond.

Final allotments showed that ₦1.54 trillion worth of bonds was sold to investors, including pension fund administrators, asset managers, and banks.

The 18.50% FGN FEB 2031 bond attracted ₦514.45 billion in total subscriptions, with ₦398.19 billion allotted at a marginal rate of 17.62%.

Meanwhile, the 9.00% FGN FEB 2034 bond received ₦1.06 trillion in bids, resulting in an allocation of ₦576.33 billion at a stop rate of 17.50%.

The longest tenor on offer, the 22.60% FGN JAN 2035 bond, recorded aggregate subscriptions of ₦975.21 billion. The DMO ultimately allotted ₦570.16 billion of the bond at a yield of 17.52%.

Following the auction, activity in the secondary FGN bond market was relatively subdued, though sentiment leaned bullish amid speculation that the DMO could increase supply in subsequent auctions.

Average benchmark yields dipped marginally by 1 basis point to close at 16.73%, with the 21-Feb-2034 bond seeing the strongest demand, as yields compressed by 20 basis points.

Yields along the mid-section of the curve settled within the 16.90% to 17.70% range. Analysts expect movements in the secondary market this week to be shaped by auction outcomes, evolving supply expectations, and prevailing demand dynamics.