Investors bid N1.73tn as DMO allots N1.56tn FGN bonds
By Aboki Forex —
Investors placed bids worth N1.73tn for Federal Government of Nigeria bonds at the Debt Management Office auction on 17 August 2026. The DMO allotted N1.56tn across three securities, exceeding the N1.10tn initially offered.
Strong demand came mainly from the non-competitive segment of the auction. The exercise featured reopened FGN bonds maturing in 2035, 2037 and 2038, with settlement scheduled for 19 August.
Auction breakdown
A total of 595 bids were received, of which 226 were successful. The 15.45 per cent FGN June 2038 bond recorded the strongest demand, attracting 225 bids valued at N821.32bn.
The DMO accepted 161 competitive bids and allotted N631.02bn through the competitive window. An additional N742.29bn was allotted to non-competitive bidders for the 2038 bond, taking its total allocation above N1.37tn. The marginal rate for the instrument was 17.79 per cent.
The 22.60 per cent FGN January 2035 bond received 199 bids worth N513.61bn. Thirty-one bids were successful, resulting in a competitive allotment of N64.13bn and a further N10bn allocation to non-competitive bidders. Its marginal rate stood at 17.15 per cent.
The 16.2499 per cent FGN April 2037 bond attracted 171 bids valued at N392.48bn. The DMO accepted 34 bids and allotted N110.01bn at a marginal rate of 17.19 per cent. No non-competitive allotment was recorded for the instrument.
Yields fall sharply
The auction results highlight continued investor appetite for longer-dated government securities. The 2038 bond alone accounted for almost half of the total value of bids received.
However, marginal rates were significantly lower than those recorded at the previous auction in July. In July, the 2035, 2037 and 2038 bonds cleared at marginal rates of 18.34 per cent, 18.35 per cent and 18.40 per cent, respectively.
The August auction recorded declines of more than 100 basis points across all three instruments. Investors were willing to accept lower yields despite maintaining strong demand for government debt.
Bond features and programme
The DMO retained the original coupon rates of 22.60 per cent, 16.2499 per cent and 15.45 per cent for the 2035, 2037 and 2038 bonds respectively. Marginal rates represent the yields at which successful bids were cleared.
FGN bonds are issued by the DMO on behalf of the Federal Government to finance budgetary requirements and other public expenditure. Investors receive periodic coupon payments, while the principal is repaid at maturity.
The securities are backed by the Federal Government and qualify as trustee investments under Nigerian law. They also enjoy tax-exempt treatment under relevant Companies Income Tax and Personal Income Tax provisions.
The August auction forms part of the DMO’s third-quarter 2026 bond issuance programme. That programme provides for the reopening of the three securities in July, August and September.
What it means
Strong subscription alongside falling clearing yields points to sustained investor confidence in sovereign debt. Lower borrowing costs for the government could ease fiscal pressure as it continues to rely on domestic borrowing to finance public obligations.