The Debt Management Office (DMO) has announced intentions to raise N800 billion from the domestic market through a Federal Government of Nigeria (FGN) bond auction scheduled for February 23, 2026, according to the official offer circular released on February 16, 2026.
This issuance marks a substantial year-on-year expansion from the N350 billion offered in February 2025, equating to an increase of N450 billion or approximately 129%. However, it represents an 11% reduction from the record N900 billion auctioned in January 2026, indicating a slight moderation in borrowing volume for the month.
The February offer comprises re-openings of three existing instruments: N400 billion of the 17.95% FGN June 2032 bond (7-year tenor), N300 billion of the 19.89% FGN May 2033 bond (10-year tenor), and N100 billion of the 19.00% FGN February 2034 bond (10-year tenor). Settlement is set for February 25, 2026.
In contrast, last year’s February auction included shorter maturities, with N200 billion in a 5-year re-opening at 19.30% and N150 billion in a 7-year at 18.50%. The current structure focuses exclusively on longer 7- and 10-year tenors, aligning with efforts to extend the average duration of Nigeria’s domestic debt portfolio and alleviate refinancing risks in the near term.
Coupon rates remain elevated amid persistent tight monetary conditions and liquidity constraints. The 7-year offering at 17.95% shows a modest decline from January’s 18.50% equivalent, while the 10-year coupons of 19.00% and 19.89% are lower than January’s peak of 22.60% on a similar tenor, hinting at some stabilization or easing at the longer end of the yield curve. Overall, borrowing costs for extended maturities continue to cluster around 18-20%, underscoring the high expense of domestic financing.
This reliance on local bond markets persists as the government balances fiscal needs with elevated interest rates influenced by the Central Bank of Nigeria’s policy stance. Recent data from secondary market indicators suggest yields on comparable 10-year government bonds have hovered in the mid-to-high teens in early February 2026, though primary auction outcomes will depend on investor demand.
The planned issuance reflects ongoing strategies to fund budgetary requirements through cost-effective domestic sources while managing debt sustainability. Market participants anticipate strong interest from institutional investors, including pension funds and banks, drawn by the attractive yields in a high-rate environment.
Analysts view the February program as a calibrated approach—scaling back slightly from January’s peak while significantly outpacing last year’s levels—amid efforts to optimize the debt mix and support economic priorities without exacerbating short-term pressures. The auction’s success will provide further insight into investor appetite and prevailing funding costs in Nigeria’s fixed-income landscape.
