Investors showed strong appetite for Nigerian government securities as they submitted bids worth N1.73 trillion at the Debt Management Office’s latest Federal Government of Nigeria bond auction. The DMO eventually allotted N1.56 trillion across three reopened bonds, significantly exceeding its initial offer of N1.10 trillion as demand remained strong, particularly from non-competitive investors.
The August 17, 2026 auction attracted 595 bids, with 226 successful, covering FGN bonds maturing in 2035, 2037 and 2038. The 15.45 per cent FGN June 2038 bond emerged as the most sought-after instrument, drawing bids valued at N821.32 billion from 225 investors. The DMO allotted N631.02 billion through the competitive window and another N742.29 billion to non-competitive bidders, pushing total allocation for the bond above N1.37 trillion.
The 22.60 per cent FGN January 2035 bond also attracted significant interest, receiving 199 bids worth N513.61 billion. The DMO accepted 31 competitive bids, allotting N64.13 billion, alongside a further N10 billion to non-competitive investors. Meanwhile, the 16.2499 per cent FGN April 2037 bond attracted 171 bids valued at N392.48 billion, with N110.01 billion allotted to 34 successful bidders. Its marginal rate stood at 17.19 per cent.
Despite the strong demand, investors accepted noticeably lower yields compared with the previous auction in July. The marginal rates for the 2035, 2037 and 2038 bonds fell to 17.15 per cent, 17.19 per cent and 17.79 per cent, respectively, from 18.34 per cent, 18.35 per cent and 18.40 per cent in July. The decline of more than 100 basis points across all three securities suggests that investors were increasingly comfortable buying longer-term government debt at lower returns.
The latest auction highlights continued confidence in Nigeria’s sovereign debt market as the Federal Government turns to domestic borrowing to support its fiscal obligations and budgetary needs. The auction is part of the DMO’s third-quarter 2026 issuance programme, which provides for the reopening of the three bonds in July, August and September. With the 2038 bond alone accounting for almost half of total bids received, investor demand appears particularly strong for longer-dated government securities.
source: punch
