The Debt Management Office (DMO) has put up a total of N1.1 trillion worth of Federal Government of Nigeria (FGN) bonds for subscription at its August 2026 auction, as the government continues to raise funds from the domestic capital market.

 The offer comprises N250 billion of the 22.60 per cent FGN January 2035 bond, N100 billion of the 16.2499 per cent FGN April 2037 bond and N750 billion of the 15.45 per cent FGN June 2038 bond.

 According to an offer circular issued by the DMO, the auction is scheduled for August 17, 2026, while settlement for successful transactions will take place on August 19.

The latest offer is part of the Federal Government’s regular borrowing programme through the domestic debt market, where it sells government securities to investors to raise funds and manage its financing needs.

The DMO, which conducts the auction on behalf of the Federal Government, said the bonds are being offered through a re-opening of existing securities rather than the creation of entirely new instruments. This means investors will be buying into bonds that are already in circulation.

For investors, the three securities offer different maturity periods and coupon rates. The 22.60 per cent FGN January 2035 bond has a remaining maturity of about nine years, while the 16.2499 per cent FGN April 2037 bond runs for about 11 years. The 15.45 per cent FGN June 2038 bond has the longest maturity of the three, giving investors exposure to a government security that runs for about 12 years.

The DMO said investors can subscribe at N1,000 per unit, with a minimum subscription of N50,000 and additional subscriptions in multiples of N1,000.

This means an investor does not necessarily need millions of naira to participate in the auction. However, the amount required for a successful investment will depend on the number of units subscribed for and the price eventually determined at the auction.

The DMO explained that because these are re-openings of previously issued bonds, their coupon rates have already been fixed. Consequently, investors will bid on the basis of the yield they want to earn.

 “For re-openings of previously issued bonds, where the coupon is already set, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument,” the DMO stated.

In simple terms, this means that investors are not negotiating a new interest rate for the bonds. Instead, they submit bids indicating the yield they are prepared to accept, while the price of the bond is adjusted to reflect that yield.

The bonds will continue to pay interest twice a year, while the principal amount will be repaid in full on the maturity date.

The arrangement makes FGN bonds attractive to investors looking for regular income as well as those seeking to preserve capital over a longer period. Since the securities are issued by the Federal Government, they are generally regarded as among the major low-risk investment instruments available in the Nigerian capital market, although their market value can change before maturity. 

The DMO said the bonds are “backed by the full faith and credit of the Federal Government of Nigeria” and are charged upon the general assets of Nigeria.

The securities also have a number of features that make them useful to institutional investors. The DMO said the bonds qualify as securities in which trustees can invest under the Trustees Investment Act.

They also qualify as government securities under the Companies Income Tax Act and the Personal Income Tax Act for tax exemption purposes for pension funds, among other investors.

In addition, the bonds are listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange, giving investors an organised market through which they can trade the securities.

The DMO also said all FGN bonds qualify as liquid assets for the purpose of calculating banks’ liquidity ratios.

This makes the instruments particularly relevant to banks, pension fund managers, insurance companies, asset managers and other institutional investors that need securities that can generate income while also meeting regulatory or portfolio requirements.

Investors interested in participating in the auction are expected to approach any of the DMO’s appointed Primary Dealer Market Makers, known as PDMMs.

The institutions listed by the DMO include Access Bank, Citibank Nigeria, Coronation Merchant Bank, Ecobank Nigeria, FBNQuest Merchant Bank, First Bank of Nigeria, First City Monument Bank, FSDH Merchant Bank, Rand Merchant Bank Nigeria, Guaranty Trust Bank, Stanbic IBTC Bank, Standard Chartered Bank Nigeria, United Bank for Africa and Zenith Bank. 

The DMO stated that it reserves the right to allot the FGN bonds at its discretion.

The August offer comes against the background of continued activity in Nigeria’s fixed-income market, where domestic government securities remain an important avenue for financing the Federal Government and providing investment opportunities for institutions and individuals.

The DMO’s offer makes clear that while the bonds provide regular semi-annual interest payments and repayment of the principal at maturity, investors who choose to sell before maturity may receive a price that is higher or lower than what they originally paid, depending on market conditions at the time of sale.

SOURCE: THENATION