The Federal Government of Nigeria’s (FGN) latest bond auction displayed a clear signal of strong investor appetite, even as market yields slid and government issuance tightened. At the February 23 auction, total bid subscriptions surged to N2.70 trillion, far outstripping the N800 billion supply on offer. The result reflects a bid-to-offer ratio of roughly 3.4 times, indicating deep demand across domestic debt markets.
The Debt Management Office (DMO) reopened three fixed-income instruments for this primary market sale. These included the 7-year 17.95% FGN JUN 2032, the 9-year 19.89% FGN MAY 2033 and the 10-year 19.00% FGN FEB 2034. Collectively, these securities attracted more than three times the bids relative to the amount allocated for issuance.
An instrument-by-instrument look at the demand shows consistent oversubscription. The 2032 bond, with N400 billion available, drew bids of N851.59 billion. The 2033 paper offered for N300 billion attracted N874.69 billion, and the 2034 bond, with only N100 billion on offer, saw N972.93 billion in bids. The strength of these bids suggests that institutional holders have excess liquidity they are willing to commit to sovereign debt, even as benchmark yields moderate.
Despite this considerable interest, the federal government exercised restraint in its allocations. Competitive allotments totaled only N524.28 billion in February 2026, spread across the three instruments. This marked a significant reduction from the January figures, when competitive allotments reached N1.54 trillion, with an additional N130.72 billion given out through non-competitive allotments. The sharp decline in allotment volume, about 66% lower month-on-month, points to a deliberate policy choice to curb domestic borrowing, despite abundant market liquidity.
The pricing outcome was equally noteworthy. Marginal stop rates declined sharply across all tenors. The 7-year and 9-year papers cleared at 15.74%, while the 10-year bond settled at 15.50%. These figures contrast markedly with January’s higher marginal rates, which hovered above 17%, and represent reductions of up to 202 basis points in yield. In addition, bid yield ranges compressed markedly, with the upper end on some instruments dropping from levels above 25% in January to below 20% in February.
Taken together, these outcomes signal improving debt-funding conditions. Demand has strengthened significantly, yields have retraced lower, and the DMO’s measured issuance reflects a calibrated approach to sovereign financing. The steep oversubscription figure shows that Nigeria’s fixed-income market remains attractive to investors seeking risk-free returns, even when offered yields decline. At the same time, the government’s decision to scale back allotments suggests an effort to balance borrowing needs with broader fiscal and monetary stability considerations.
In summary, the February auction demonstrated broad investor confidence in FGN bonds, while the policy stance taken by the DMO indicated a conscious tightening of domestic issuance to manage borrowing costs and liquidity. The combination of strong demand and lower yields points to a more disciplined and resilient sovereign debt market.
