The federal government is set to raise N600 billion from the domestic debt market through a fresh bond auction scheduled for May 18, 2026, as authorities continue to balance fiscal financing needs with rising debt servicing pressures and evolving liquidity conditions in the economy.
The new issuance, announced by the Debt Management Office (DMO) on behalf of the federal government, underscores Nigeria’s continued dependence on the local bond market to finance budget deficits, refinance existing obligations and support public spending amid persistent fiscal constraints.
According to the offer circular released by the DMO on Tuesday, the offer consists of two re-opened Federal Government of Nigeria (FGN) bond instruments valued at N300 billion each.
The first instrument is the 22.60 percent FGN January 2035 bond, a 10-year re-opening valued at N300 billion, while the second is the 16.2499 percent FGN April 2037 bond, a 20-year re-opening also valued at N300 billion.
The auction is expected to settle on May 20, 2026.
Bond units are priced at N1,000 each, with a minimum subscription requirement of N50.001 million and additional subscriptions allowed in multiples of N1,000.
Because both instruments are re-openings of previously issued bonds, coupon rates have already been fixed, while successful bidders will pay based on the yield-to-maturity that clears the auction, in addition to accrued interest.
Interest payments will be made semi-annually, while the principal will be repaid through a bullet repayment structure at maturity.
The DMO stated that the instruments are backed by the full faith and credit of the Federal Government of Nigeria, reinforcing their position as one of the country’s benchmark risk-free investment assets.
The latest offer comes at a time when investor appetite for fixed-income securities remains strong, supported by elevated yields, relatively tight monetary conditions and growing institutional demand for government-backed instruments.
Market analysts say the auction reflects a more measured borrowing strategy by the government compared with the previous month.
A comparison with April’s auction shows that the federal government reduced its domestic bond offer size by N100 billion in May.
In April 2026, the DMO offered N700 billion across three instruments, including a N300 billion 10-year 2035 bond, a N100 billion seven-year 2032 bond and a N300 billion five-year 2030 bond.
The domestic bond market has increasingly become the government’s preferred financing channel as authorities attempt to reduce exposure to external borrowing risks associated with currency volatility and rising global interest rates.
By relying more heavily on naira-denominated borrowing, the government limits foreign exchange repayment pressures, although higher domestic interest rates continue to raise financing costs locally.
The bonds come with several regulatory and tax incentives designed to deepen market participation and strengthen liquidity in the secondary market.
According to the DMO, the instruments qualify as trustee investment securities under the Trustee Investment Act and also qualify as government securities under both the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA).
Pension funds and other eligible institutional investors may therefore benefit from tax exemptions attached to the securities.
The bonds are listed on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, allowing investors to trade them in the secondary market.
In addition, the securities qualify as liquid assets for banks when calculating liquidity ratios, further enhancing their attractiveness within the financial system.
Financial institutions approved as Primary Dealer Market Makers (PDMMs) will facilitate subscriptions for interested investors.
These include major banks such as Access Bank, First Bank of Nigeria, Stanbic IBTC Bank, Guaranty Trust Bank, United Bank for Africa, Zenith Bank, Ecobank Nigeria and Standard Chartered Bank Nigeria.
