FG Plans N800bn Bond Sale in February to Fund Domestic Debt

The Federal Government, through the Debt Management Office, has announced plans to raise N800 billion via its February 2026 bond auction, marking a significant increase from the same period last year, though slightly below January’s record N900 billion issuance.

The bond offer circular, published on Monday, shows that the N800 billion sale will comprise N400 billion of the 17.95% FGN JUN 2032 (seven-year re-opening), N300 billion of the 19.89% FGN MAY 2033 (10-year re-opening), and N100 billion of the 19.00% FGN FEB 2034 (10-year re-opening). The auction is scheduled for February 23, 2026, with settlement on February 25, 2026.

For comparison, the DMO offered N350 billion in February 2025, made up of N200 billion of the 19.30% FGN APR 2029 (five-year re-opening) and N150 billion of the 18.50% FGN FEB 2031 (seven-year re-opening). The planned February 2026 sale represents a year-on-year increase of N450 billion, a rise of 128.6%, indicating that the government seeks more than double the amount offered last year.

The maturity structure also reflects a strategic shift. Unlike February 2025, which included a five-year instrument, the February 2026 issuance focuses exclusively on seven- and 10-year tenors, suggesting an effort to lengthen the average maturity of domestic debt and ease short-term refinancing pressures.

Borrowing costs remain elevated. The seven-year bond carries a coupon of 17.95%, slightly lower than the 18.50% offered on the comparable tenor in February 2025. The 10-year instruments are priced at 19.00% and 19.89%, reflecting the persistent high interest rate environment.

Month-on-month, the February offer is N100 billion lower than January’s N900 billion, representing an 11.1% decline. The January 2026 auction featured N300 billion of 18.50% FGN FEB 2031 (seven-year), N400 billion of 19.00% FGN FEB 2034 (10-year), and N200 billion of 22.60% FGN JAN 2035 (10-year). Notably, the 10-year FGN JAN 2035 bond carried a coupon of 22.60%, higher than February’s 19.00% and 19.89% 10-year papers.

Overall, while the February sale is lower than the record January offering, it remains more than double February 2025’s issuance and is priced between 18% and 20%, highlighting the continued high cost of domestic debt financing in Nigeria.