DMO hikes rates on Nigerian Bonds as auction underperforms

The Debt Management Office (DMO) hiked rates on 10 and 20-year reopening government bonds due to significantly lower subscription attraction at the monthly auction in May, 2026.

Investors priced in higher inflation and fiscal risk, demanding a risk premium that the authority has continued to deny, as part of an effort to reduce government balance sheet funding costs.

The Debt Office opened N600 billion reopening Federal Government of Nigeria (FGN) bonds across 10 and 20 years from subscription on Monday, details from the auction circular, and results confirmed.

Reflecting weak appetite, total subscription came in at N516.25 billion, significantly below the offer size.

The monthly auction underperformed despite excess liquidity in the financial system, signalling that investors have begun to place greater value on high returns amid rising inflation.

The 10-Year FGN reopening bond worth N300 billion was put on the table for subscription by the debt office. Total subscription came in at N262.22 billion, and DMO allotted N137.67 billion to investors at a spot rate of 17%, up from 16.59% at the previous auction.

The 20-Year FGN reopened bonds attracted N253.93 billion in subscription at the auction. DMO allotted N196.86 billion at 17.04% rate, up from 15.80% at the previous auction.

The secondary bond market traded calmly, with investors focusing primarily on the primary market auction, where N600.0 billion was on offer across the Jan 2035 and Apr 2037 papers.

Overall, the average yield ultimately inched up by 1bp to 16.2% following selloffs on the APR-49