Following the December increase in spot rates, Nigeria’s Debt Management Office (DMO) is set to hold its monthly Federal Government of Nigeria (FGN) bond auction on Monday, reopening three existing instruments.
The bonds, with a total offer size of N900 billion, will be made available to investors amid mixed market expectations after the recent reversal in disinflation trends.
Signals from the Central Bank of Nigeria’s (CBN) discount rate decisions at last week’s midweek Treasury bills auction suggest a possible continuation of the repricing cycle that began in the fourth quarter of 2025.
At the first bond auction of 2026, market participants expect the DMO to reopen the 18.50% FGN FEB 2031 bond, offering N300 billion for subscription. Also on offer will be the 9.00% FGN FEB 2034 bond, with a proposed issuance of N400 billion.
In addition, the DMO plans to raise N200 billion from the 22.60% FGN JAN 2035 bond, marking an early move to help bridge the 2026 budget deficit funding gap.
At the final bond auction of 2025, the DMO raised the spot rate on the 17.945% FGN AUG 2030 bond to 17.20% from 15.9%, aligning with the prevailing yield environment set by the CBN’s Treasury bill offerings.
Similarly, the spot rate on the 17.95% FGN JUN 2032 bond was increased to 17.3% from 16%, despite stronger investor demand for the reopened seven-year bond compared with the amount on offer.
“Litmus test for the DMO on Monday at its first bond outing for 2026 in the trillion-auction series, we are reminded of duration-play in relation to the offer amount, especially at a time where it plans to offer on the trillion-mark monthly through Q1-2026.
“This auction promises to be an interesting one for the market as we remain focused on the funding need and preferred maturity-profile of the issuer despite the recent renewed interest for bonds”, AAG Capital Limited said in a commentary note.
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