N1.49tn bids test FGN bonds as borrowing rates soften

By Chibuzor Alli

Investors placed bids worth N1.49tn for Federal Government bonds at Nigeria’s September 2026 domestic auction, giving the Debt Management Office strong demand as borrowing rates showed signs of easing.

The DMO allotted N748.64bn from the N1tn offered across two securities, leaving about N746.59bn of bids unaccepted.

The auction covered a new 10-year FGN bond and a reopening of a 15-year bond, with investors showing demand above the amount offered for both securities.

For the 10-year bond, the DMO offered N400bn and allotted N288.83bn at a marginal rate of 16.79 per cent.

Investors submitted bids worth N546.90bn, putting demand for the 10-year bond 36.7 per cent above the amount offered.

The level of demand for the new 10-year instrument came alongside a moderation in yields compared with recent borrowing levels, pointing to improved investor appetite for longer-dated government securities.

15-year FGN bond attracts N947.83bn in bids

The 15-year FGN bond, offered as a N600bn reopening, attracted bids worth N947.83bn.

The DMO allotted N460.01bn from the reopening at a marginal rate of 16.85 per cent.

That rate was significantly below the 17.79 per cent recorded for the same bond at the previous auction.

The movement in the marginal rate suggests that investors were willing to accept a lower return on the longer-dated security than at the previous auction, although government borrowing costs remain elevated.

Investors bid N1.49tn for government securities

Across the two securities, investors sought N1.49tn, representing about 49.5 per cent more than the N1tn offered by the DMO.

Despite the strong demand, the debt office allotted N748.64bn.

The difference between the amount investors sought and the amount allotted indicates that the DMO was selective about the volume of debt issued at the auction.

The auction results therefore showed continued investor demand for Nigerian government securities, while also indicating a degree of moderation in the rates at which longer-term government debt was issued.

FGN bond auction watched by fixed-income investors

The latest auction comes as the Federal Government continues to rely heavily on the domestic debt market to finance its fiscal requirements and manage its debt portfolio.

The outcome is also expected to attract attention in the secondary bond market, where movements in government bond yields influence pricing across other fixed-income assets.

These include treasury bills, corporate bonds and other debt instruments.

The decline in the marginal rate on the 15-year bond points to a gradual easing in investors’ required returns on longer-term government debt.

However, borrowing costs remain elevated, meaning the government continues to face significant financing costs as it raises funds through the domestic debt market.