Market News

By Odinaka Anudu

Investors submitted bids worth N1.73tn for Federal Government of Nigeria bonds at the Debt Management Office’s 17 August 2026 auction, with the DMO ultimately allotting N1.56tn across three securities.

The amount allotted exceeded the N1.10tn initially offered, largely due to strong demand from investors participating in the non-competitive segment of the auction.

The exercise featured reopened FGN bonds maturing in 2035, 2037 and 2038, with settlement scheduled for 19 August. A total of 595 bids were received, of which 226 were successful.

The 15.45 per cent FGN June 2038 bond recorded the strongest demand, attracting 225 bids valued at N821.32bn. The DMO accepted 161 competitive bids and allotted N631.02bn through the competitive window.

An additional N742.29bn was allotted to non-competitive bidders for the 2038 bond, taking its total allocation above N1.37tn. The marginal rate for the instrument was 17.79 per cent.

The 22.60 per cent FGN January 2035 bond received 199 bids worth N513.61bn. Thirty-one bids were successful, resulting in a competitive allotment of N64.13bn and a further N10bn allocation to non-competitive bidders.

Its marginal rate stood at 17.15 per cent. Meanwhile, the 16.2499 per cent FGN April 2037 bond attracted 171 bids valued at N392.48bn. The DMO accepted 34 bids and allotted N110.01bn at a marginal rate of 17.19 per cent. No non-competitive allotment was recorded for the instrument.

The auction results highlight continued investor appetite for longer-dated government securities, with the 2038 bond alone accounting for almost half of the total value of bids received.

However, the marginal rates were significantly lower than those recorded at the previous auction in July.

In July, the 2035, 2037 and 2038 bonds cleared at marginal rates of 18.34 per cent, 18.35 per cent and 18.40 per cent, respectively.

The August auction therefore recorded declines of more than 100 basis points across all three instruments, indicating that investors were willing to accept lower yields despite maintaining strong demand for government debt.

The DMO retained the original coupon rates of 22.60 per cent, 16.2499 per cent and 15.45 per cent for the 2035, 2037 and 2038 bonds respectively. The marginal rates represent the yields at which successful bids were cleared at the auction.

FGN bonds are issued by the DMO on behalf of the Federal Government to finance budgetary requirements and other public expenditure. Investors receive periodic coupon payments, while the principal is repaid at maturity.

The securities are backed by the Federal Government and qualify as trustee investments under Nigerian law. They also enjoy tax-exempt treatment under relevant Companies Income Tax and Personal Income Tax provisions.

The August auction forms part of the DMO’s third-quarter 2026 bond issuance programme, which provides for the reopening of the three securities in July, August and September.

The strong subscription, alongside falling clearing yields, points to sustained investor demand for sovereign debt as the Federal Government continues to rely on domestic borrowing to finance its fiscal obligations.