FG double its January bond auction to N900bn amid mounting fiscal pressures

The federal government plans to raise N900 billion from its January 2026 bond auction, double the N450 billion targeted in January 2025, as fiscal pressures and refinancing needs continue to mount.

Offer documents released by the Debt Management Office (DMO) show that the auction will feature three reopened Federal Government of Nigeria (FGN) bonds: N300bn from the February 2031 bond (18.50% coupon), N400bn from the February 2034 bond (19.00% coupon), and N200bn from the January 2035 bond (22.60% coupon).

By contrast, the January 2025 offering was more restrained, comprising three bonds across five-, seven-, and ten-year tenors, with a total of N450bn.

The increase in 2026, particularly in ten-year instruments accounting for N600bn (two-thirds of the total), signals a shift toward longer-dated debt, aimed at extending the government’s maturity profile and reducing near-term refinancing risk.

Coupon rates on the 2026 bonds remain high, reflecting tight monetary conditions and investor demand for protection against inflation and interest-rate uncertainty.

The 22.60% coupon on the January 2035 bond is a significant increase over rates for similar tenors a year ago.

The DMO said bonds will be sold at N1,000 per unit, with a minimum subscription of N50,001, semi-annual interest payments, and bullet repayment at maturity.

For reopened bonds, successful bidders will pay prices based on auction-clearing yields plus accrued interest.

Despite the larger borrowing programme, minister of finance and coordinating minister of the economy, Wale Edun, emphasized that the government intends to focus on domestic revenue mobilisation to reduce reliance on borrowing.

Speaking at the World Economic Forum in Davos on January 20, Edun said: “The issue now is to focus on revenue, focus on domestic resource mobilisation.

“We’re hoping to rely less on borrowing.”

He added that while international bond markets remain an option, the government’s priority is to strengthen fiscal sustainability through increased tax revenue and domestic resources amid global economic pressures.