Kayode Tokede
Despite a moderation in yields across some maturities, investors’ appetite for Federal Government of Nigeria (FGN) bonds remained exceptionally strong in the first half of 2026, with total subscriptions rising to N9.04 trillion, more than doubling the N4.37 trillion recorded in the corresponding period of 2025.
THISDAY’s findings showed that the remarkable demand was driven largely by institutional investors, particularly Pension Fund Administrators (PFAs), banks, and insurance companies, which continued to favour the safety of sovereign securities and the opportunity to lock in relatively attractive returns amid an uncertain macroeconomic environment.
The sustained over-subscription also reflects investors’ confidence in the federal government’s ability to honour its debt obligations, even as the Debt Management Office (DMO) continued its strategy of reopening existing bonds to deepen the domestic debt market and finance the country’s widening fiscal deficit amid limited access to external funding.
An analysis of FGN bond auction results obtained by THISDAY showed that the DMO offered bonds worth N4.95 trillion during the first six months of 2026, representing a 6.2 per cent increase over the N4.66 trillion offered in the corresponding period last year.
However, actual allotments stood at approximately N4.8 trillion, representing a remarkable 159.5 per cent increase over the N1.85 trillion raised in the first half of 2025.
The year’s first auction, held in January, witnessed overwhelming investor interest as the DMO reopened the February 2031, February 2034, and January 2035 bonds with a combined offer of N900 billion. Investors submitted bids worth N2.25 trillion, prompting the DMO to allot N1.68 trillion at stop rates of 17.62 per cent, 17.50 per cent and 17.52 per cent, respectively.
Investor appetite strengthened further in February when the DMO reopened the August 2030, May 2033, and February 2034 bonds, offering N800 billion in total.
Total subscriptions climbed to about N2.69 trillion, although only N524.28 billion was allotted. The stop rate on the February 2034 bond declined sharply by 200 basis points to 15.50 per cent, reflecting easing yields.
Demand moderated in March as the DMO reopened the August 2030, June 2032, and May 2033 bonds, offering N750 billion in total. Total subscriptions reached N931.5 billion, while allotments amounted to N485.5 billion. Stop rates on the June 2032 and May 2033 bonds rose by 41 basis points and 90 basis points to 16.15 per cent and 16.64 per cent, respectively, while the August 2030 bond closed at 16 per cent.
The April auction maintained the positive momentum, attracting bids of N948 billion against an offer of N700 billion across the August 2030, June 2032, and January 2035 bonds. Demand remained concentrated at the longer end of the yield curve as investors continued to seek higher returns in the prevailing tight monetary environment, with the 10-year bond accounting for the bulk of subscriptions.
Activity slowed somewhat in May when the DMO reopened the January 2035 and April 2037 bonds, offering N600 billion. Total subscriptions stood at N516.15 billion, while allotments amounted to N334.53 billion. The stop rate on the January 2035 bond rose by 41 basis points to 17 per cent, while the April 2037 bond closed at 17.04 percent.
Demand rebounded strongly in June as the DMO doubled its offer to N1.2 trillion by reopening the January 2035 and April 2037 bonds. Investors subscribed to N1.41 trillion, with the DMO allotting N1.22 trillion. Stop rates increased significantly to 18.34 per cent and 18.35 per cent, respectively, reflecting changing expectations regarding inflation and interest rates.
Auction data showed that demand remained strongest for longer-dated securities, while shorter-tenor instruments, particularly the five-year bond, attracted relatively weaker interest. Bid rates ranging from 15 per cent to 22.60 per cent also underscored divergent market expectations regarding inflation, monetary policy, and the future direction of interest rates.
Market operators attributed the robust demand to institutional investors’ preference for risk-free assets. PFAs, in particular, continued to dominate the bond market, seeking stable long-term investments that could match their liabilities while preserving capital.
An investment banker and stockbroker, Mr. Tajudeen Olayinka, noted that the auctions reflected the competing interests of investors and the government.
According to him, “Investors naturally seek higher returns on new issuances, while the government is equally determined to avoid excessive borrowing costs. The final pricing, therefore, reflects a balance between these two objectives.”
