DMO allots N1.56 trillion FGN bonds as demand hits N1.73 trillion, lowers rates

Nigeria’s Debt Management Office (DMO) allotted a combined N1.56 trillion across three Federal Government of Nigeria (FGN) bond offerings at its August 17, 2026 auction, after investors submitted bids worth N1.73 trillion.

This is contained in DMO’s auction results, which showed that the debt office allotted well above the amount offered on the back of a heavily subscribed non-competitive window.

The settlement is scheduled for Wednesday, August 19.

The auction, which offered a combined N1.10 trillion across the reopened 22.60% FGN January 2035, 16.2499% FGN April 2037 and 15.45% FGN June 2038 bonds, recorded strong demand for long-dated government securities, with the 15.45% FGN June 2038 bond attracting the largest subscription and allocation.

What the DMO is saying:

The DMO offered a combined N1.1 trillion across the three instruments: N250 billion on the 22.60% FGN January 2035 bond, N100 billion on the 16.2499% FGN April 2037 bond and N750 billion on the 15.45% FGN June 2038 bond.

• Investors submitted a total of 595 bids, valued at approximately N1.73 trillion, with 226 bids eventually successful.
• The 22.60% FGN January 2035 bond attracted 199 bids worth N513.61 billion, out of which 31 bids were successful. The Debt Office allotted N64.13 billion to the competitive market and a further N10 billion on a non-competitive basis, at a marginal rate of 17.15%.
• The 16.2499% FGN April 2037 bond drew 171 bids worth N392.48 billion, with 34 bids successful. N110.01 billion was allotted to the market at a marginal rate of 17.19%, with no non-competitive allotment recorded.
• The 15.45% FGN June 2038 bond recorded the strongest demand by far, pulling in 225 bids worth N821.32 billion, of which 161 were successful. The Debt Office allotted N631.02 billion to the competitive market, alongside a bumper N742.29 billion in non-competitive allotments, at a marginal rate of 17.79% — pushing total allotment on that single instrument above N1.37 trillion.

Across the three tenors, the DMO accepted 226 bids out of 595 submitted, with the original coupon rates of 22.60%, 16.2499% and 15.45% maintained even as successful bids were priced at the higher marginal rates.

More insights:

The auction was heavily skewed toward the 15-year paper, the 15.45% FGN June 2038 bond, which accounted for almost half of total investor subscriptions and the bulk of total allotments.

• The bond cleared at a marginal rate of 17.79%, the highest among the three instruments, compared with 17.15% for the 2035 bond and 17.19% for the 2037 paper.
• The DMO’s decision to allot substantially above the advertised N1.1 trillion offer was driven largely by the non-competitive window, particularly on the 2038 instrument which turned out the dominant auction.
• The marginal rates settled at 17.15% for the 2035 bond, 17.19% for the 2037 bond and 17.79% for the 2038 bond.

This represents a notable shift from the June auction, when the 2035 and 2037 bonds cleared at 18.34% and 18.35%, respectively.

The August rates therefore remain below June levels, but investors are still willing to commit substantial funds to longer-duration sovereign debt even with lower yields around the 17%–18% range, ahead of an anticipated moderation in yields.

What you should know:

The August numbers mark a sharp jump from the July 20 auction when the DMO allotted N929.32 billion across the same three re-opened bonds after receiving N1.74 trillion in bids.

• The July 20 auction saw marginal rates of 18.34%, 18.35% and 18.40% respectively — meaning this month’s stop rates have eased by more than 100 basis points across the board even as total allotment rose.
• FGN bonds are long-term debt instruments issued by the DMO on behalf of the Federal Government to finance budget deficits and fund public spending.
• Investors earn fixed coupon payments over the life of the bond, with the principal repaid at maturity.

The instruments remain a benchmark for Nigeria’s fixed income market, backed by the full faith and credit of the Federal Government, and qualify as trustee investments under the Trustee Investment Act.

• They are also recognised as government securities for tax-exemption purposes under the Companies Income Tax Act and the Personal Income Tax Act.
• The elevated non-competitive allotment on the June 2038 bond stands out as the defining feature of this auction, with the DMO absorbing significantly more long-dated demand outside the competitive bidding process than in recent months.

The outcome underscores the Federal Government’s continued reliance on domestic borrowing to finance fiscal obligations. The August auction forms part of the DMO’s Q3 2026 bond programme, which features reopenings of the same three instruments in July, August and September.