DMO auctions N600bn reopened bonds as yields rise to 22.60%

THE Debt Management Office (DMO) has auctioned N600 billion worth of reopened Federal Government bonds, with yields reaching as high as 22.60 percent as borrowing costs remain elevated.

Acting on behalf of the Nigerian government, the agency reopened two previously issued bond instruments carrying coupon rates of 22.60 percent and 16.2499 percent, with settlement fixed for May 20, 2026.

The offer was divided into two maturities: a 10-year and a 20-year bond; with investors entitled to semi-annual coupon payments, while the principal repayment will be made in full upon maturity.

The issuance comprises N300 billion of the 22.60 percent FGN Bond maturing in January 2035 and another N300 billion of the 16.2499 percent FGN Bond due in April 2037.

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The transaction was executed through Primary Dealer Market Makers (PDMMs), including leading financial institutions such as Access Bank, Zenith Bank and Guaranty Trust Bank.

Each unit of the bonds is priced at N1,000, while the minimum subscription has been set at N50.001 million. The instruments are fully backed by the faith and credit of the Federal Government of Nigeria.

As reopened instruments, the coupon rates remained unchanged, although successful bidders will pay prices determined by the yield-to-maturity that clears at the auction, alongside accrued interest.

The reopening approach allows the DMO to improve liquidity in already existing bond lines instead of introducing entirely new instruments into the domestic debt market.

Analysts pointed to the wide yield gap between the two papers, noting that the shorter-dated 10-year bond offers a significantly higher yield than the longer 20-year instrument.

The trend underscores the inverted yield curve that has persisted in Nigeria’s fixed-income market amid elevated interest rates and continued tight monetary policy conditions.

The bonds continue to enjoy incentives targeted at institutional investors. They qualify as trustee securities under the Trustee Investment Act and are exempt from taxes under both the Companies Income Tax Act (CITA) and Personal Income Tax Act (PITA) for pension funds and eligible investors.

The instruments are also listed on the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange, providing liquidity in the secondary market and improving price discovery.

In addition, the bonds qualify as liquid assets for banks’ liquidity ratio calculations, making them attractive to financial institutions seeking regulatory compliance assets.

The auction marked the 5th bond reopening exercise conducted by the DMO since December 2025, reflecting the Nigerian government’s increasing reliance on reopening existing debt lines to source domestic funding.

The January 2026 bond auction saw total allotments rise to N1.54 trillion against an initial offer of N900 billion, driven largely by strong investor appetite for reopened instruments, including the same 22.60 percent January 2035 bond now being reissued.

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Subsequent auctions held in February and April 2026 also followed the reopening strategy, although yields eased slightly from the highs recorded earlier in the year.

With the latest auction, the 22.60 percent January 2035 bond further consolidates its position as the Federal Government’s benchmark long-dated instrument in Nigeria’s high-yield fixed-income market.