FG Raises N6.49tn from Bond Market in Eight Months to Bridge Deficit

Between January and August 2026, the federal government raised approximately N6.49 trillion through the issuance of FGN bonds, as reported by the Debt Management Office (DMO). The government has been relying heavily on the domestic debt market to fund fiscal obligations, given limited external financing options. Analysis of DMO auction data revealed that a total of N12.22 trillion was subscribed, suggesting that investors, particularly Pension Fund Administrators (PFAs), prefer risk-free instruments like FGN bonds and Nigerian Treasury Bills (NTBs).

The DMO initially offered N7.35 trillion to investors but ultimately settled for N6.49 trillion due to high borrowing costs and rising debt service pressures. The DMO reopened several FGN bonds with modest interest rates in an effort to attract investors and aid the government in bridging the budget deficit. In August 2026, for instance, the DMO reopened the JAN-2035, APR-2037, and JUN-2038 bonds, offering a total of N1.10 trillion, which saw a total demand of N1.73 trillion.

The stop rates on these bonds contracted significantly, settling at 17.15%, 17.19%, and 17.79%, respectively. Similarly, in July 2026 and June 2026, the DMO reopened the same bonds, resulting in total demands of N1.74 trillion and N1.41 trillion, respectively. The over-subscription of these bonds indicates that investors have confidence in the government's ability to meet its debt obligations and prefer investment instruments with lower volatility and assured capital returns, despite the relatively low yields.