FGN Bond Auction 2026: Federal Government Raises N1.54 Trillion Amid Oversubscription
The Federal Government of Nigeria has launched its 2026 domestic borrowing program with a highly successful FGN Bond auction, raising N1.54 trillion—well above the N900 billion initially offered. According to the Debt Management Office (DMO), total subscriptions reached N2.25 trillion, reflecting robust investor appetite for government debt despite global economic uncertainties.
The January auction featured three bonds: the 7-year FGN FEB 2031, the 10-year FGN FEB 2034, and the newly introduced 10-year FGN JAN 2035. Longer-tenured instruments proved especially popular, with the FGN 2034 bond receiving subscriptions totaling N1.01 trillion against a N400 billion offer, while the JAN 2035 bond had 335 bids and sold N570 billion—nearly triple the original offer of N200 billion.
Market analysts note that the current demand defies typical trends where investors usually seek higher yields for longer-term bonds. In Nigeria, short-term debt instruments recently offered higher rates than long-term bonds, with a 364-day Treasury bill yielding 18.47% while the new 10-year bond cleared at 17.52%. The 95-basis-point difference indicates growing market confidence in a future monetary policy shift as disinflation trends take hold.
Experts now anticipate a 300–400 basis point cut in benchmark interest rates later in 2026. CardinalStone Research highlights a fragmented yield curve, projecting rate rises in medium-term bonds while keeping short-term rates high enough to curb foreign exchange speculation. The oversubscription signals strong liquidity in the banking system but also raises concerns about a “crowding-out” effect, as companies may struggle with more expensive debt financing.
With the government already raising over N3.8 trillion from Treasury bills and bonds in the first three weeks of 2026, the FGN’s bond strategy underscores Nigeria’s growing appeal to investors while highlighting the delicate balance between public funding needs and the health of the real economy. The success of the January auction sets the tone for the rest of the year, reflecting confidence in government debt amid ongoing fiscal pressures.
source: leadership