DMO raises N1.54trn from Nigerian Bonds auction, rates shift

Debt Management Office (DMO) raised N1.54 trillion at its monthly auction sales in January as investors’ subscription signaled a higher appetite for the naira assets.

The debt capital market welcomed its first auction in 2026 with a N900 billion offer size across 7- and 10-year reopening bonds. Analysts said the authority is more likely to frontload its local borrowings, a pattern that has been sustained in the recent past, given the rising budget deficit.

Total subscriptions surged past the amount the authority offered for subscription, with higher demand seen on JAN 2034 FGN bonds at the auction.

The DMO auctioned 18.50% FGN FEB 2031 worth N300 billion for subscription. Also, 9.00% FGN FEB 2034 local bonds totaling N400 billion was offered for subscription, targeting N200 billion from 22.60% FGN JAN 2035 bonds.

Total subscriptions settled at N2.50 trillion, though N1.54 trillion worth of local bonds was allotted to the market participants, including pension fund administrators, wealth managers, and banks.

18.50% FGN FEB 2031 reopening bonds received a total subscription of N514.45 billion, and a sum of N398.19 billion was allotted at 17.62%.

9.00% FGN FEB 2034 local bonds attracted N1.06 trillion in subscription, and the authority allocated N576.33 billion to market participants with successful bids at the rate of 17.50%.

DMO’s auction results also showed that 22.60% FGN JAN 2035 bonds recorded N975.21 billion in aggregate subscriptions at the auction. The Debt Office, however, underwrote and sold N570.16 billion bonds to investors at the rate of 17.52%
Due to the auction, the proceedings in the secondary market for FGN bond was relatively quiet with a bullish tilt as speculations that the DMO could increase supply remained dominant.

The average benchmark yield declined marginally by -1bp to close at 16.73%. Notably, the 21-Feb-34 (-20bps) saw renewed demand.
Yields at the belly of the curve closed within the range of 16.90% and 17.70%.

Analysts expect the results of the primary market auction to drive yield movements this week. Overall, supply and demand dynamics are projected to drive yield movements during the week.