DMO allots N748.64 billion as FGN bond demand falls 13.5% in September

The Federal Government allotted N748.64 billion to investors at its September 2026 bond auction, while total subscriptions reached N1.49 trillion as demand moderated from the previous month.

This is according to the latest circular released by the Debt Management Office (DMO) on Tuesday.

The September auction, conducted by the DMO, featured a new 10-year bond maturing in September 2036 and a reopening of the 15.45% FGN June 2038 bond.

According to the circular, investors submitted N1.49 trillion in bids, with the government allotting N748.64 billion to the market and a further N850 billion through non-competitive allotments.

What the DMO is saying

The September auction recorded N1.49 trillion in subscriptions, down from N1.73 trillion across the three instruments offered in August.

• This represents a decline of about 13.5% month-on-month.
• The amount allotted to the market also fell, from N805.16 billion in August to N748.64 billion in September, representing a 7% decline.
• The September auction attracted 441 bids across the two instruments, with 204 successful bids.
• For the new 16.79% FGN September 2036 bond, investors submitted N546.90 billion against an offer of N400 billion. The DMO allotted N288.63 billion to the market, while the marginal rate was set at 16.79%.
• The reopened 15.45% FGN June 2038 bond attracted stronger demand, receiving N947.83 billion in bids against an offer of N600 billion. N460.01 billion was allotted to the market at a marginal rate of 16.85%.

The most notable change was recorded on the reopened June 2038 bond, whose marginal yield fell to 16.85% in September from 17.79% at the August auction.

• This represents a decline of 94 basis points, indicating that investors accepted a significantly lower yield to hold the longer-dated government security.
• The August auction featured three instruments, including the 22.60% FGN January 2035, the 16.2499% FGN April 2037 and the 15.45% FGN June 2038 bonds. Their marginal rates were 17.15%, 17.19% and 17.79%, respectively.

In September, the DMO introduced the new September 2036 issue with a 16.79% coupon, while maintaining the 15.45% coupon on the reopened June 2038 bond.

Get up to speed

Earlier, Nairametrics reported that the federal government sought to raise N1 trillion in its September 2026 bond auction with a minimum entry threshold of N50.001 million for participating investors.

• The offer comprises N400 billion of a new 10-year FGN bond due September 2036 and N600 billion of the 15.45% FGN June 2038 bond, which is being re-opened.
• The September auction follows strong demand at the DMO’s August bond auction, where investors submitted bids worth N1.73 trillion against an offer of N1.1 trillion.
• The DMO subsequently allotted N1.56 trillion across the three instruments offered at the August 17 auction.

Also, Nairametrics reported that DMO raised N5.86 billion through the FGNSB in August 2026, down from the N6.19 billion raised in July, indicating softer investor demand during the month.

• Nairametrics had earlier reported that the DMO’s August FGNSB offer carried an annual interest rate of up to 14.963%, lower than the rates offered under the latest September issuance.

What you should know

The September results point to a bond market where borrowing costs have eased on the longer-dated benchmark, even as investor demand remains selective.

• Earlier, Nairametrics reported that DMO opened its September 2026 Savings Bond offer, offering investors annual interest rates of up to 15.12%.
• 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.