DMO offers N2 trillion FGN bonds on Monday as N3.37 trillion inflows hit the system

The Debt Management Office (DMO) will offer N2 trillion for auction across four Federal Government of Nigeria (FGN) bond re-openings on Monday, November 16, 2026, as approximately N3.37 trillion in liquidity inflows is expected to enter the banking system during the week, according to Cowry Asset Research.

The DMO’s offer comes against a banking-system liquidity surplus of approximately N3.97 trillion, comprising Standing Deposit Facility (SDF) and the Opening Balances of Banks on Friday, November 13, according to the Central Bank of Nigeria’s financial data.

The auction represents a larger funding offer than October’s N1.75 trillion and could absorb a substantial portion of the expected inflows if the DMO allots the full amount.

FGN Bond Auction targets N2 trillion:

The DMO is offering N2 trillion across four existing FGN bonds, with settlement scheduled for Wednesday, November 18, 2026.

The securities are being re-opened, meaning they retain their existing coupon rates and maturity dates, while investors submit bids based on the yields they require.

• The 21.00% FGN MAR 2028 bond carries an offer of N700 billion.
• The 19.30% FGN APR 2029 bond has an offer of N250 billion.
• The 17.945% FGN AUG 2030 bond accounts for N750 billion, the largest allocation.
• The 19.89% FGN MAY 2033 bond carries an offer of N300 billion.

The November offer exceeds the N1.75 trillion advertised at the October auction, where the DMO allotted approximately N1.21 trillion.

The October auction involved the February 2034, September 2036 and June 2038 bonds, with investors submitting bids across the three maturities.

The latest offer places the largest amounts in the 2030 and 2028 bonds, which together account for N1.45 trillion, or 72.5% of the total.

The March 2028 bond carries the highest coupon rate at 21.00%, while the May 2033 bond has the longest maturity among the four instruments.

The actual amount raised will depend on investor demand and the yields accepted by the DMO at the auction.

Banking liquidity faces auction pressure:

The November 16 bond auction comes amid expectations of substantial liquidity inflows into Nigeria’s banking system.

Approximately N3.37 trillion inflows are expected during the week, and the CBN financial data showed a liquidity surplus of about N3.97 trillion as of November 13.

• Open Market Operations maturities are projected at N1.95 trillion, representing the largest component of expected inflows
• Treasury Bills maturities are estimated at N1.11 trillion.
• FGN bond coupon payments are expected to contribute approximately N312 billion.
• A full N2 trillion bond allotment would represent approximately 59.3% of the week’s projected inflows.

The eventual impact on banking-system liquidity will depend on the actual bond allotment, the timing of settlement, and the CBN’s liquidity-management operations.

Recent auctions suggest that the DMO may limit allotments rather than accept substantially higher borrowing costs.

• At the October 19 bond auction, stop rates on the September 2036 and June 2038 bonds increased by 50 and 34 basis points to 17.29% and 17.19%, respectively.
• The highest bids reached 19.00% on the February 2034 bond and 18.50% on the other two instruments, above the accepted stop rates.
• A similar approach was observed at the October 28 Treasury Bills auction, where the DMO rejected approximately N1.84 trillion in bids and allotted just N71.16 billion.

The 364-day Treasury Bill stop rate declined to 15.80% from 15.90%, highlighting the DMO’s willingness to restrict allotments rather than accept higher rates.

Investors bid on Bond Yields:

The four bonds being offered are re-openings of existing Federal Government securities, meaning their coupon rates have already been fixed.

Successful bidders will pay prices corresponding to the accepted yields to maturity, together with accrued interest, rather than simply purchasing the bonds at their stated coupon rates.

• The August 2030 bond was originally issued at a stop rate of approximately 17.94%, while the May 2033 bond carried a 19.89% stop rate.
• The minimum subscription is N50.001 million, with additional subscriptions in multiples of N1,000.
• Interest is payable semi-annually, while the principal is redeemed at maturity.
• The securities are listed on the Nigerian Exchange and FMDQ OTC Securities Exchange.

The minimum subscription requirement makes the auction more accessible to institutional and high-value investors than ordinary retail participants.

The bonds also qualify as trustee investments under the Trustee Investment Act and as liquid assets for banks’ liquidity-ratio calculations.

The offer terms further described the bonds as government securities eligible for specified tax treatment under the Companies Income Tax Act and Personal Income Tax Act, including provisions relevant to pension funds.

For investors, the key consideration will be the yields accepted across the four maturities, particularly as the securities carry different coupons and remaining terms.

For the DMO, the auction will test its willingness to absorb liquidity through a larger bond allotment while managing the government’s borrowing costs.

The final allotment and stop rates will provide an indication of how the government is balancing funding requirements against investor yield expectations.