DMO offers two re-opened instruments as government leans further on local borrowing amid fiscal pressure….
The Debt Management Office (DMO), on behalf of the Federal Government, has announced plans to raise N600 billion through a new Federal Government of Nigeria (FGN) bond auction scheduled for May 2026.
The issuance is part of government efforts to finance budgetary commitments, support infrastructure funding, and strengthen participation in the domestic capital market, which has continued to record strong investor appetite for fixed-income securities.
According to an offer circular released by the DMO on Tuesday, the auction will hold on May 18, 2026, while settlement for successful bids is expected two days later on May 20, 2026.
The offer comprises two re-opened benchmark bonds, each valued at N300 billion. The instruments include a 22.60 per cent FGN January 2035 bond and a 16.2499 per cent FGN April 2037 bond.
Both securities are re-openings of previously issued bonds, meaning their coupon rates remain unchanged, while pricing will be determined through competitive bidding based on yield-to-maturity.
Investors are required to subscribe with a minimum of N50.001 million, with additional bids in multiples of N1,000.
The bonds will pay interest semi-annually, while principal repayment will be made in full at maturity under a bullet repayment structure.
The DMO confirmed that the instruments carry the full faith and credit of the Federal Government, making them among the safest investment options in the domestic debt market.
The latest issuance reflects the government’s continued reliance on the local bond market to finance fiscal deficits, refinance maturing obligations, and support capital expenditure, while limiting exposure to foreign currency borrowing risks.
However, the May offer represents a slight reduction compared to April 2026, when the government offered N700 billion across three instruments, including 5-year, 7-year and 10-year bonds.
The N100 billion reduction suggests a more cautious borrowing approach, likely influenced by improved liquidity conditions in the financial system as well as efforts to manage rising debt servicing obligations.
Despite the reduced size, investor interest in FGN bonds is expected to remain strong, driven by attractive yields and their status as low-risk, government-backed instruments.
The bonds also come with several regulatory and tax incentives aimed at encouraging institutional participation.
They qualify as trustee investment securities under the Trustee Investment Act and are recognised as government securities under both the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA).
This makes them eligible for tax exemptions for pension funds and other qualified institutional investors.
In addition, FGN bonds are listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange, allowing for secondary market trading and improved liquidity.
They also qualify as liquid assets for banks in liquidity ratio calculations, further reinforcing their importance in Nigeria’s financial system.
The DMO directed interested investors to participate through approved Primary Dealer Market Makers (PDMMs), including major financial institutions such as Access Bank, First Bank, Stanbic IBTC, GTBank, UBA, Zenith Bank, Ecobank, and Standard Chartered Bank Nigeria.
