The Federal Government borrowed N2.69tn from the domestic bond market in the first quarter of 2026, buoyed by strong investor demand that significantly exceeded the amount offered for subscription.
An analysis of auction results released by the Debt Management Office showed that the funds were raised through a mix of competitive and non-competitive allotments across bond auctions held in January, February, and March.
During the period, the government offered bonds worth N2.45tn, while investors submitted subscriptions totalling N5.88tn. Out of the total bids received, about 45.64 per cent were accepted, indicating that less than half of the bids were allotted.
The figures also showed that total subscriptions amounted to about 240.14 per cent of the bonds offered, reflecting an oversubscription level of more than twice the offer size. On a strictly competitive basis, the allotment ratio stood at around 43.42 per cent.
A year-on-year comparison revealed that the government significantly increased its borrowing from the bond market. In the first quarter of 2025, total allotment stood at about N1.94tn, compared with N2.69tn in the same period of 2026, representing an increase of N750.08bn or 38.76 per cent.
Investor appetite also rose sharply during the period. Total subscriptions jumped from N2.83tn in the first quarter of 2025 to N5.88tn in 2026, representing an increase of N3.05tn or 107.71 per cent.
Despite the stronger demand, the share of bids accepted declined from about 68.32 per cent in the first quarter of 2025 to 45.64 per cent in 2026, suggesting a more cautious borrowing strategy by the government.
A breakdown of the quarterly figures showed that most of the borrowing occurred in January.
In January 2026, the government offered N900bn worth of bonds and received subscriptions of N2.25tn. Total allotment, including non-competitive bids, stood at N1.68tn, representing about 74.37 per cent of subscriptions and 186.16 per cent of the amount offered.
Compared to January 2025, when N601.04bn was allotted, the January 2026 figure was higher by N1.07tn, representing a 178.75 per cent increase. Investor demand also rose sharply from N669.94bn recorded in January 2025.
In February 2026, the government offered N800bn and recorded subscriptions of N2.70tn, the highest monthly demand during the quarter. However, only N524.28bn was allotted.
This represented a subscription rate of about 337.40 per cent, while only 19.42 per cent of bids were accepted, highlighting a wide gap between investor demand and the government’s actual borrowing.
On a year-on-year basis, February 2026 recorded stronger demand but lower borrowing compared with February 2025, when N910.39bn was allotted from subscriptions of N1.63tn. This reflected a decline of N386.11bn or 42.41 per cent in allotment despite higher investor interest.
In March 2026, the government offered N750bn, received subscriptions of N931.50bn, and allotted N485.50bn. This translated to a subscription rate of about 124.20 per cent, with approximately 52.12 per cent of bids accepted.
Compared with March 2025, when N423.68bn was allotted, the March 2026 figure represented an increase of N61.82bn or 14.59 per cent.
Month-on-month analysis showed that the government gradually reduced the size of bond offers from N900bn in January to N800bn in February and N750bn in March.
Investor demand, however, rose from N2.25tn in January to N2.70tn in February before declining sharply to N931.50bn in March.
Similarly, total allotment dropped from N1.68tn in January to N524.28bn in February and further to N485.50bn in March, indicating that borrowing was heavily concentrated in the first month of the quarter.
The auction results also revealed a significant drop in borrowing costs compared with the same period in 2025, although there was a slight increase in March 2026.
In January 2026, marginal rates ranged between 17.50 per cent and 17.62 per cent, compared with between 21.79 per cent and 22.60 per cent recorded in January 2025.
Rates declined further in February 2026 to between 15.50 per cent and 15.74 per cent, compared with about 19.20 per cent to 19.33 per cent in February 2025, indicating a reduction of roughly 3.5 to 3.8 percentage points.
However, marginal rates rose slightly in March 2026 to between 16.00 per cent and 16.64 per cent. Despite the increase, borrowing costs remained below the March 2025 levels, which ranged from 19.00 per cent to 19.99 per cent.
Overall, the data showed that borrowing costs remained significantly lower than in the previous year, even as rates edged upward towards the end of the quarter.
Looking ahead, the Federal Government plans to raise N700bn from the domestic bond market in April 2026, continuing the gradual reduction in offer size.
According to the April 2026 Federal Government of Nigeria Bond Offer Circular issued by the Debt Management Office, the auction is scheduled for April 27, with settlement expected on April 29.
The bonds will be issued through the re-opening of existing instruments across three maturities, a strategy designed to improve liquidity in benchmark securities.
However, economists have warned that rising government borrowing from the domestic financial system could crowd out private sector access to credit.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, noted that banks often prefer investing in government securities because they are considered safer and offer attractive yields.
He explained that the Federal Government’s deficit financing strategy has led to increased issuance of treasury bills and bonds, which financial institutions often favour over lending to businesses.
Yusuf urged the government to moderate its borrowing from the domestic market to avoid limiting access to credit for the real sector of the economy.
