DMO Raises N2.02tn As FGN Bond Yields Climb To 17.29%

Yields on Federal Government of Nigeria (FGN) bonds rose by as much as 50 basis points at the October 19, 2026, bond auction, as the Debt Management Office (DMO) allotted N1.22tn to investors through the sale of three reopened debt instruments.

The increase in yields on the longer-dated bonds came as the DMO accepted higher rates to raise funds, with the stop rate on the September 2036 bond climbing to 17.29 per cent from 16.79 per cent at the September auction.

The June 2038 bond also recorded an increase in its stop rate to 17.19 per cent from 16.85 per cent, representing a rise of 34 basis points, while the February 2034 bond settled at 16.99 per cent.

The N1.22tn market allotment represented an increase of approximately 63.5 per cent over the N748.64bn allotted at the September auction, reflecting the higher volume of funds raised through the primary market.

In addition to the market allotment, the DMO allocated another N800bn through non-competitive bids, split equally between the February 2034 and September 2036 bonds.

This brought total allotments at the October auction to N2.02tn, comprising N1.22tn allotted through competitive bidding and N800 billion through non-competitive allotments.

The auction results showed that the DMO reopened three existing bonds and offered a combined N1.75tn to investors. Total bids also stood at N1.75tn, although the agency allotted N1.22tn through the competitive market, rejecting approximately N523.58bn, or about 30 per cent of subscriptions.

The outcome translated into a bid-to-cover ratio of approximately 1.4 times, indicating that investors submitted bids equivalent to about 1.4 times the amount ultimately allotted through the market.

The increase in stop rates on the longer-dated securities highlights the pricing conditions under which the Federal Government is raising funds from the domestic debt market, with investors bidding at varying rates across the three instruments.

The February 2034 bond attracted bids worth N304.08bn against an offer of N500bn, representing a bid-to-offer ratio of 0.61 times.

The DMO allotted N92.14bn to the market through the instrument, equivalent to approximately 30 per cent of the bids received. Bid rates ranged from 16.00 per cent to 19.00 per cent, while the stop rate was fixed at 16.99 per cent.

The September 2036 bond attracted the largest volume of subscriptions among the three instruments, with investors submitting bids worth N925.35bn against an offer of N800bn.

This represented a bid-to-offer ratio of approximately 1.16 times. The DMO allotted N781.31bn through the market, equivalent to about 84 per cent of the bids received.

The stop rate on the bond rose to 17.29 per cent from 16.79 per cent at the previous auction, making it the instrument with the highest reported stop rate among the three securities offered.

For the June 2038 bond, investors submitted bids totalling N518.32bn against an offer of N450bn, resulting in a bid-to-offer ratio of approximately 1.15 times.

The DMO allotted N350.72bn through the market at a stop rate of 17.19 per cent, compared with 16.85 per cent in September.

The results showed that the DMO allotted less than the amounts offered for the February 2034 and June 2038 bonds, while the September 2036 instrument accounted for the largest share of the competitive market allotment.

The February 2034 bond received bids below the amount offered, while subscriptions for the September 2036 and June 2038 bonds exceeded their respective offer sizes.

The higher stop rates on the September 2036 and June 2038 bonds indicate that the DMO accepted higher borrowing rates on the longer-dated instruments than at the previous auction.

The auction also illustrated differences in investor demand across the maturity spectrum, with the September 2036 bond attracting the largest volume of bids and receiving the highest market allotment.

The DMO conducts FGN bond auctions as part of the Federal Government’s domestic borrowing programme, offering debt instruments with different maturities to investors in the local financial market.

The bonds provide the government with a source of funding, while investors receive interest payments over the life of the securities and repayment of principal at maturity, subject to the terms of the instruments.

Changes in auction stop rates are important indicators of the yields at which the government can raise funds in the domestic market. Higher yields generally mean that the government must offer greater returns to investors on newly allotted securities, potentially increasing borrowing costs over time.

For investors, movements in bond yields influence the relative attractiveness of fixed-income securities compared with other investment options, including Treasury bills, bank deposits and equities.

The October auction’s combination of higher yields on longer-dated bonds and a larger total allotment provides an indication of the rates accepted by the DMO to raise funds from the domestic debt market.