FG raises N7.62tn from bond market in eight months

Nigeria's Federal Government has successfully raised N7.62 trillion from its domestic bond market in the first eight months of 2026. This significant borrowing through fixed-income instruments is crucial for financing the government's budget and meeting other fiscal obligations, especially amid a projected budget deficit of approximately N31.5 trillion.

The Debt Management Office (DMO) managed eight Federal Government of Nigeria (FGN) bond auctions during this period. The August auction alone saw N805.2 billion allotted through competitive bids. While this was less than the N1.1 trillion offered, total allotments reached about N1.56 trillion after including N752.3 billion from non-competitive allotments, according to Cowry Asset Management Limited.

Investor demand for these bonds has remained robust, with total subscriptions reaching N1.7 trillion at the August auction. This resulted in a bid-to-cover ratio of 2.1 times, indicating strong market interest. The June 2038 bond proved particularly popular, attracting N821.3 billion in bids against N631 billion in competitive allotments.

Despite strong demand, the DMO maintained a measured approach to pricing. Analysts noted that the relatively low competitive allotments in some cases reflected the government's yield considerations rather than a deficit in investor appetite. Demand for government securities is driven by investors seeking attractive returns and anticipating potential yield declines as inflation moderates. However, higher yields on short-term treasury bills continue to influence investment decisions, contributing to an inverted yield curve where shorter-dated instruments offer higher returns than some longer-term ones.