The Digest:
The Debt Management Office (DMO) has announced plans to raise N800 billion through its February 2026 Federal Government bond auction, more than double the N350 billion offered in February 2025. According to the bond circular published Monday, the offer comprises N400 billion of 17.95% FGN JUN 2032 (seven-year reopening), N300 billion of 19.89% FGN MAY 2033 (10-year reopening), and N100 billion of 19.00% FGN FEB 2034 (10-year reopening). The auction is scheduled for February 23, with settlement on February 25. The February 2026 offering represents a 128.6% year-on-year increase, though slightly lower than January's record N900 billion. Borrowing costs remain elevated with coupons ranging from 17.95% to 19.89%, reflecting the high interest rate environment and government's attempt to lengthen domestic debt maturity profiles.
Key Points:
- The massive borrowing increases Nigeria's domestic debt stock, with future generations bearing repayment burden.
- High coupon rates (18-20%) reflect elevated borrowing costs, consuming significant revenue for interest payments.
- Investors gain attractive returns, while taxpayers ultimately fund the debt servicing.
- This signals government's continued reliance on domestic borrowing to finance deficits.
- The timing, with longer tenors, aims to reduce near-term refinancing pressure.
The N800bn February bond issuance more than doubles last year's offering, locking in high borrowing costs as government seeks to extend debt maturity profiles.
Sources: The Punch, Debt Management Office
