The Federal Government has raised N7.62tn from the domestic bond market between January and August 2026, highlighting its growing reliance on local borrowing to fund the budget and meet other financial obligations. The funds were raised through eight Federal Government of Nigeria bond auctions conducted by the Debt Management Office (DMO).
The latest borrowing comes as the government faces a projected budget deficit of about N31.5tn, making the domestic capital market an increasingly important source of financing. At the August auction alone, the DMO allotted N805.2bn through competitive bids for bonds maturing in January 2035, April 2037 and June 2038.
However, the total amount raised at the latest auction climbed to about N1.56tn after N752.3bn was sold through non-competitive allotments, according to Cowry Asset Management Limited. Investor appetite remained strong, with total subscriptions reaching N1.7tn, pushing the bid-to-cover ratio to 2.1 times, up from 1.9 times at the previous auction.
The June 2038 bond attracted the strongest demand, receiving N821.3bn in bids against N631bn in competitive allotments, alongside N742.3bn in non-competitive allotments. Despite the heavy interest, the DMO remained cautious on pricing, with marginal yields of 17.79 per cent for the June 2038 bond and 17.15 per cent for the January 2035 instrument.
Analysts said the relatively low competitive allotments were more about the government’s yield considerations than weak investor demand. With inflation moderating, investors are positioning for possible future declines in bond yields, although attractive returns on short-term Treasury bills continue to shape investment decisions. The N7.62tn raised through FGN bonds also excludes funds from Treasury bills, Sukuk and other debt instruments, underscoring the government’s continued dependence on the domestic market to finance public spending.
source: punch
