FG opens N900bn bond auction with yields up to 22.60%

The Federal Government has opened a N900 billion bond auction in the domestic debt market, offering investors yields of up to 22.60 percent as it continues to fund its financing needs through Federal Government of Nigeria (FGN) bonds.

The Debt Management Office (DMO) disclosed this in an offer circular announcing the issuance of three FGN bonds to be sold by auction on January 26, 2026. The issuance is being made on behalf of the Federal Government of Nigeria under the provisions of the Debt Management Office (Establishment) Act 2003 and the Local Loans (Registered Stock and Securities) Act, Cap L17, Laws of the Federation of Nigeria 2004.

According to the circular, the DMO is offering N300 billion of the FGN February 2031 bond with a seven-year tenor at a coupon of 18.50 percent, N400 billion of the FGN February 2034 bond with a 10-year tenor at 19.00 percent, and N200 billion of the FGN January 2035 bond, also with a 10-year tenor, at 22.60 percent. All three instruments are re-openings of previously issued bonds.

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The auction is scheduled to be held on January 26, 2026, while settlement is expected on January 28, 2026.

The DMO explained that because the bonds are re-openings, the coupon rates have already been fixed. Successful bidders will therefore be required to pay a price corresponding to the yield-to-maturity bid that clears the total amount being auctioned, in addition to any accrued interest on the bonds.

The bonds qualify as securities in which trustees can invest under the Trustee Investment Act and are recognised as government securities under the Companies Income Tax Act and the Personal Income Tax Act. As a result, they are eligible for tax exemption for pension funds and other qualifying investors. The bonds are also listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange and qualify as liquid assets for liquidity ratio calculation by banks.

The DMO added that interest on the bonds will be paid semi-annually, while the principal will be repaid in full on the maturity date under a bullet repayment structure. The instruments are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of the country.

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Investors interested in participating in the auction have been advised to submit their bids through any of the authorised Primary Dealer Market Makers, including Access Bank, Citibank Nigeria, Coronation Merchant Bank, Ecobank Nigeria, FBNQuest Merchant Bank, First Bank of Nigeria, First City Monument Bank, Guaranty Trust Bank, Rand Merchant Bank Nigeria, Stanbic IBTC Bank, Standard Chartered Bank Nigeria, United Bank for Africa, Zenith Bank, and BSDH Merchant Bank.

The DMO also noted that it reserves the right to allot the bonds at its discretion, a provision that gives the government flexibility in managing its borrowing programme in line with prevailing market conditions.