FG Plans N700 billion Bond Sale in April as Rates Climb

The Federal Government, through the Debt Management Office (DMO), plans to raise N700 billion from the domestic debt market in April 2026, maintaining an aggressive borrowing stance as yields on long-term instruments remain elevated.

Details from the April 2026 FGN Bond Offer Circular show that the offering will be conducted via auction on April 27, with settlement scheduled for April 29.

The issuance comprises a mix of reopened bonds across three maturities, reflecting the government’s strategy of deepening liquidity in existing instruments rather than introducing new tenors.

What the offer circular shows 

The April issuance is split across three reopened instruments, including N300 billion in the 17.945% FGN August 2030 bond, N100 billion in the 17.95% FGN June 2032 bond, and another N300 billion in the 22.60% FGN January 2035 bond.

This structure shows a continued tilt towards longer-dated securities, with the 10-year bond accounting for a significant portion of the offering. The approach allows the government to lock in funding over an extended horizon while spreading refinancing risks.

However, the relatively smaller allocation to the 7-year paper suggests selective demand expectations across the yield curve, as investors continue to price in macroeconomic uncertainties, including inflation risks and global financial conditions.

Like previous issuances, the bonds will be sold in units of N1,000, with a minimum subscription of N50.001 million, targeting institutional investors such as pension funds, banks, and asset managers.

The DMO noted that the instruments qualify as liquid assets for banks and are exempt from certain taxes under existing laws, reinforcing their attractiveness in a high-yield environment.

Offer drops by N50 billion month-on-month 

A comparison with the March 2026 offer circular shows that the government has slightly reduced its borrowing target from N750 billion in March to N700 billion in April.

In March, the DMO offered N250 billion in the 5-year bond, N200 billion in the 7-year bond, and N300 billion in a 10-year bond, bringing the total to N750 billion. The April adjustment reflects a modest recalibration rather than a significant shift in borrowing strategy.

Notably, while the total offer size declined by N50 billion, the allocation pattern changed. The April issuance increased the share of the 5-year bond from N250 billion to N300 billion, while cutting the 7-year offer by half from N200 billion to N100 billion. The 10-year component remained constant at N300 billion.

The continued reliance on re-openings also indicates that the government is prioritising liquidity in benchmark bonds, which can improve pricing efficiency and secondary market activity.

Rates signal sustained high-yield environment 

The coupon rates attached to the April instruments highlight the persistence of elevated yields in Nigeria’s fixed-income market.

While the 5-year and 7-year bonds retain similar coupon levels of about 17.945% and 17.95%, respectively, the 10-year bond carries a significantly higher rate of 22.60%. This marks a notable jump from the 19.89% coupon on the comparable 10-year instrument offered in March.

The widening gap in long-term yields reflects growing investor demand for higher compensation to hold longer-duration assets, amid uncertainties around inflation, exchange rate stability, and global shocks.

In practice, the final yields will be determined through the auction process, where successful bidders pay a price based on their yield-to-maturity bids, alongside accrued interest.

The sustained high-rate environment aligns with broader monetary conditions, as the Central Bank of Nigeria (CBN) maintains a tight policy to anchor inflation expectations. This has kept domestic borrowing costs elevated, increasing the government’s debt servicing burden.

What you should know 

Nairametrics earlier reported that the Debt Management Office (DMO) increased borrowing costs at its latest Federal Government (FGN) bond auction conducted on March 30, while significantly cutting allotments to N485.50 billion.

This was according to the auction results of reissued FGN Bonds, which showed a sharp rise in stop rates compared to the previous auctions in early February and mid-March 2026.

Despite strong investor demand, the DMO hiked the rates across the mid- and longer maturities above previous stop rates, marking a shift in yield dynamics.