DMO allots N2.2 trillion at Oct 19 FGN Bond Auction as stop rates rise by 50bps

The Debt Management Office (DMO) allotted N1.22 trillion to the market at its October 19, 2026, Federal Government of Nigeria (FGN) bond auction, about 63.5% more than the N748.64 billion allotted in September.

It also made N800 billion in non-competitive allotments, split equally between the February 2034 and September 2036 bonds, bringing total allotments to N2.02 trillion.

The auction results showed that the DMO accepted higher yields on the 10-year and 15-year bonds to raise the amount.

The agency reopened three bonds and offered N1.75 trillion in total, while investors submitted bids worth the same amount.

The N1.22 trillion market allotment resulted in a bid-to-cover ratio of 1.4x, with the DMO rejecting about N523.58 billion, or roughly 30% of subscriptions.

FGN Bond yields rise by up to 50 basis points:

The stop rates on the September 2036 and June 2038 bonds, which were on-the-run at the previous auction, rose by 50 basis points (bps) and 34bps to 17.29% and 17.19%, respectively. The February 2034 bond settled at 16.99%.

The results for the three reopened bonds showed different levels of investor demand and allotment.

• 19.00% FGN FEB 2034: Bids reached N304.08 billion against an offer of N500 billion, representing a 0.61x bid-to-offer ratio. The DMO allotted N92.14 billion to the market, about 30% of bids, with bid rates ranging from 16.00% to 19.00%.
• 16.79% FGN SEP 2036: Investors submitted N925.35 billion in bids against N800 billion offered, representing a 1.16x ratio. The DMO allotted N781.31 billion, about 84% of bids, at a stop rate of 17.29%, up from 16.79% in September.
• 15.45% FGN JUN 2038: Bids totalled N518.32 billion against N450 billion offered, representing a 1.15x ratio. The DMO allotted N350.72 billion at 17.19%, compared with 16.85% in September.

The figures show that the DMO accepted higher rates on the longer-dated bonds while allocating most of the September 2036 bond’s successful funding to the market.

FGN Bond demand rises as yields rebound

The October auction attracted 443 bids, of which 274 were successful, compared with 441 bids and 204 successful bids in September. Total subscriptions rose by about 17% from N1.49 trillion in September auction.

The June 2038 bond also recorded a reversal in its recent yield trajectory.

• The bond cleared at 18.40% in July, 17.79% in August and 16.85% in September.
• Its October stop rate of 17.19% represents a rebound, although it remains 60bps below the August level.
• The February 2034 bond was undersubscribed and was not part of the DMO’s third-quarter calendar.
• The highest bids reached 19.00% for the February 2034 bond and 18.50% for the other two bonds, above their respective stop rates.

Nairametrics previously reported that the DMO offered N1 trillion in September, comprising a new 10-year bond and the June 2038 reopening. In August, the agency allotted N1.56 trillion across three bonds on demand of N1.73 trillion.

Rates had fallen following the Central Bank of Nigeria’s Monetary Policy Committee decision to cut the benchmark interest rate by 350bps to 23% on September 22. However, the DMO rejected about 74% of Treasury bill bids on October 14 and raised the one-year stop rate to 15.90% from 15.85%, its first increase since August.

DMO signals higher borrowing costs

The October auction suggests that the DMO is willing to pay slightly more to raise bond funding after weeks of falling rates. Its approach was more accommodating than in the Treasury bills market, where it restricted allotments to resist rising rates.

• The increase in stop rates on the September 2036 and June 2038 bonds indicates that investors demanded higher yields at the auction.
• The allotment figures show that the DMO continued to manage how much it accepted at different rates.

The key test is whether yields continue to rise at the next auction or stabilise around current levels.