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FG Raises ₦5trn from Bonds in Six Months
The Federal Government raised ₦5.08 trillion from the domestic bond market in the first half of 2026, a 77.8% increase compared to ₦2.86 trillion in the same period of 2025, according to analysis of Debt Management Office (DMO) auction results.
Despite the surge, borrowing costs declined, with average marginal rates easing compared to last year. Investor appetite remained strong, with total subscriptions exceeding ₦9 trillion in six months.
The government offered ₦4.95 trillion worth of bonds between January and June, up from ₦1.85 trillion in 2025, reflecting a more aggressive borrowing programme.
Subscriptions rose to ₦9.04 trillion, though the demand ratio fell to 182.6% from 236.1% a year earlier, showing supply outpaced demand growth.
January and June recorded the highest borrowings, with ₦1.68 trillion and ₦1.22 trillion allotted respectively, compared to much lower figures in 2025.
Borrowing was weaker in February and April, while May saw a sharp increase due to non-competitive allocations.
Average marginal rates across instruments fell to 16.78% from 19.84% in 2025, while allotment-weighted averages dropped to 17.29% from 20.14%.
The 22.60% FGN January 2035 bond was the largest funding instrument, accounting for ₦1.52 trillion in allotments.
Foreign investors also showed strong interest, channeling $3.23 billion into Nigerian bonds in Q1 2026, a 268% increase from the same period in 2025. Analysts say high yields and improved FX confidence boosted inflows.
Economist Dr. Muda Yusuf warned that rising government borrowing is crowding out the private sector, as banks prefer low-risk, high-yield securities over lending to businesses.
He urged moderation and greater use of public-private partnerships for infrastructure.
Analysts at Coronation Asset Management predict bond yields will remain elevated through Q3 2026, with limited scope for reversal before Q4, citing sticky inflation, fiscal pressures, and cautious monetary policy.
