The Federal Government borrowed N5.08 trillion from Nigeria’s domestic bond market between January and June 2026, showing a major increase compared to the N2.86 trillion raised during the same period in 2025. This represents a 77.8 percent rise in borrowing, according to figures released by the Debt Management Office (DMO).
The increase came even though borrowing costs were lower than last year. Investors continued to show strong confidence in government bonds, with total subscriptions reaching more than N9 trillion during the first half of the year. This means investors were willing to invest far more money than the government planned to raise.
To meet its growing financial needs, the government offered N4.95 trillion worth of bonds between January and June 2026, compared to N1.85 trillion during the same period in 2025. This sharp increase reflects the government’s stronger reliance on domestic borrowing to finance budget deficits and public spending.
Although investor demand remained high, the level of interest was slightly lower when compared to the larger volume of bonds offered. More than 2,800 bids were submitted during the six-month period, while about 1,449 bids were accepted. The DMO became more selective in approving bids despite increased participation from investors.
January recorded the highest borrowing, with total bond allotments reaching about N1.68 trillion, making it the strongest month of the year. June followed with N1.22 trillion, while May also posted strong results after the government raised nearly N895 billion. Borrowing was lower in February and April, while March recorded a modest increase over the previous year.
The government’s borrowing costs also declined during the period. Average bond rates dropped to around 16.8 percent, compared to nearly 20 percent during the first half of 2025. Lower rates reduced borrowing expenses while still attracting strong investor interest.
Among the different bond offerings, the FGN January 2035 bond attracted the highest level of investment, accounting for more than N1.5 trillion in successful allotments. The FGN April 2037 bondalso received strong demand shortly after it was introduced, while the FGN May 2033 bond remained popular among investors.
Foreign investors also increased their participation in Nigeria’s bond market. During the first quarter of 2026, they invested $3.23 billion in Nigerian bonds, representing a significant increase from the previous year. According to data from the National Bureau of Statistics, bond investments made up nearly one-third of all portfolio investments entering the country during the period.
The strong interest in Nigerian bonds has been supported by relatively high interest rates. Since 2023, the Central Bank of Nigeria has maintained a tight monetary policy to fight inflation, stabilize the naira, and restore investor confidence. Although the Monetary Policy Rate has been reduced slightly in recent months, it remains high enough to keep government securities attractive to both local and foreign investors.
However, economists have expressed concerns over the government’s growing dependence on domestic borrowing. Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, warned that heavy government borrowing is reducing the amount of credit available to private businesses. According to him, banks prefer investing in government securities because they offer high returns with lower risk than lending to companies.
He also cautioned that while attractive bond yields have helped bring foreign investment into Nigeria, they have also increased the country’s debt servicing costs. Yusuf advised the government to reduce excessive borrowing and instead encourage more public-private partnerships to finance infrastructure projects.
Market analysts expect government bond yields to remain relatively high throughout the third quarter of 2026 due to persistent inflation and continued fiscal pressures. Investment experts believe interest rates are unlikely to decline significantly until later in the year unless inflation falls more steadily or the Central Bank adopts a more accommodative monetary policy.
Overall, the first half of 2026 showed that the Federal Government successfully expanded its domestic borrowing programme while maintaining strong investor confidence. However, experts believe balancing borrowing needs with sustainable debt management will remain one of Nigeria’s biggest economic challenges in the months ahead.
