Market News

By Sami Tunji

The Federal Government raised N5.08tn from the domestic bond market in the first six months of 2026, marking a 77.8 per cent increase from the N2.86tn raised during the corresponding period of 2025, an analysis of Debt Management Office auction results by The PUNCH has shown.

The increase came despite a decline in borrowing costs, with average marginal rates easing compared with last year, even as investor appetite remained strong, with subscriptions exceeding N9tn over the six-month period.

The DMO auction results showed that the Federal Government allotted N5.08tn worth of bonds between January and June 2026, compared with N2.86tn allotted during the same period in 2025, representing an increase of N2.22tn. The figures include both competitive and non-competitive allotments disclosed in the auction results.

The government also significantly increased the amount of bonds offered to investors during the review period. Between January and June 2026, it offered N4.95tn worth of bonds, compared with N1.85tn in the corresponding period of 2025. This represents an increase of N3.10tn, or 167.6 per cent, reflecting a more aggressive domestic borrowing programme.

Investor demand also strengthened in nominal terms. Total subscriptions rose to N9.04tn in the first half of 2026 from N4.37tn a year earlier, an increase of N4.67tn or about 107 per cent.

However, demand moderated when measured against the size of the government’s offer. While subscriptions were equivalent to 236.1 per cent of the amount offered in the first half of 2025, the ratio declined to 182.6 per cent in the corresponding period of 2026. This suggests that although investors committed substantially more money, the increase did not keep pace with the sharp expansion in borrowing requirements.

A further analysis of the auction data showed that investors submitted 2,823 bids across all bond auctions in the first six months of 2026, up from 1,621 bids in the corresponding period of 2025.

Successful bids also increased from 926 to 1,449 over the period. However, the proportion of successful bids declined to 51.3 per cent in 2026 from 57.1 per cent in 2025, indicating that the DMO became more selective in accepting bids despite stronger participation.

The government’s monthly borrowing profile showed significant differences across the six months. January recorded the highest borrowing during the review period, with N1.54tn allotted to competitive investors and total allotments of about N1.68tn after including non-competitive allocations, compared with N601.04bn in January 2025.

June followed with total allotments of N1.22tn, compared with just N100bn during the corresponding month of 2025, making it one of the strongest months for domestic debt issuance.

May also witnessed a sharp increase, with N614.51bn allotted through competitive bids and total allotments rising to N894.51bn after the inclusion of a N280bn non-competitive allocation for the 16.2499 per cent FGN April 2037 bond. This compares with N300.69bn raised in May 2025.

Borrowing was relatively lower in February and April. The DMO allotted N524.28bn in February 2026, down from N910.39bn in February 2025, while April allotments fell to N276.79bn from N520.90bn recorded during the corresponding period last year.

March was the only other month to record an increase, with allotments rising to N485.50bn from N423.68bn.

The data also point to a decline in the government’s domestic borrowing costs. Marginal rates across the various bond instruments ranged between 15.50 per cent and 18.35 per cent during the first half of 2026. In comparison, marginal rates ranged from 17.75 per cent to 22.60 per cent during the corresponding period of 2025.

The simple average marginal rate across all instruments declined to about 16.78 per cent in the first six months of 2026 from about 19.84 per cent in the same period of 2025. Similarly, the allotment-weighted average marginal rate fell to about 17.29 per cent from about 20.14 per cent.

The 22.60 per cent FGN January 2035 bond remained the government’s largest funding instrument during the review period. Across four reopening auctions held between January and June 2026, the bond attracted subscriptions of about N2.30tn and accounted for approximately N1.52tn in allotments.

The 16.2499 per cent FGN April 2037 bond also recorded strong investor interest. Offered only in May and June, the 20-year instrument attracted subscriptions exceeding N1.24tn and total allotments of about N1.38tn, boosted by the N280bn non-competitive allocation recorded in May.

Among shorter-tenor instruments, the 19.89 per cent FGN May 2033 bond attracted N1.34tn in subscriptions and N541.34bn in allotments during its three reopening auctions in February and March 2026.

In contrast, the 2025 auction data showed that the 19.89 per cent FGN May 2033 bond accounted for the largest share of government borrowing during the first half of the year, raising N1.07tn, while the 18.50 per cent FGN February 2031 bond followed with N758.90bn.

The figures indicate that while the Federal Government significantly expanded domestic borrowing during the first half of 2026, investor demand remained robust despite the larger supply of securities.

The PUNCH earlier reported that foreign investors channelled $3.23bn into Nigerian bonds in the first quarter of 2026, highlighting a strong appetite for the country’s fixed-income securities amid elevated interest rates and improving confidence in the foreign exchange market.