Nigeria’s Debt Management Office has announced plans to raise N800bn through its Federal Government bond auction scheduled for February 2026, signalling a continued reliance on domestic borrowing to finance government obligations and manage fiscal pressures. The planned issuance represents a significant increase compared to the amount offered during the same period last year, although it is slightly lower than the record level seen in January 2026.
The bond offer is structured across three re-opened instruments, reflecting the government’s strategy of deepening liquidity in existing bonds rather than introducing entirely new securities. The offer includes N400bn worth of the 17.95 per cent Federal Government bond maturing in June 2032, which has a remaining tenor of seven years. In addition, N300bn will be raised through the 19.89 per cent bond due in May 2033, while another N100bn will be sourced from the 19.00 per cent bond maturing in February 2034. These three instruments together bring the total value of the February auction to N800bn.
The auction itself is scheduled to take place on February 23, 2026, with settlement expected two days later on February 25. This timeline follows the standard process through which successful bidders pay for the bonds and formally assume ownership.
When compared with the February 2025 bond offer, the scale of the February 2026 issuance reflects a sharp year-on-year increase. In February 2025, the government offered a total of N350bn in bonds, consisting of N200bn in a five-year instrument maturing in April 2029 and N150bn in a seven-year bond maturing in February 2031. The jump from N350bn in February 2025 to N800bn in February 2026 represents an increase of N450bn, translating to a rise of approximately 128.6 per cent. This means the government is now seeking more than double the amount it attempted to raise during the corresponding period the previous year.
Beyond the increase in size, the structure of the February 2026 issuance also reveals a notable shift in maturity profile. Unlike the February 2025 offering, which included a shorter five-year bond, the current auction focuses entirely on medium- to long-term instruments with seven-year and 10-year maturities. This shift suggests that the government is deliberately extending the average maturity of its domestic debt portfolio. By issuing longer-term bonds, the authorities aim to reduce the frequency of refinancing obligations and ease short-term repayment pressures, thereby improving overall debt sustainability and cash flow management.
The pricing of the bonds highlights the continued high cost of borrowing in Nigeria’s domestic debt market. The seven-year bond carries a coupon rate of 17.95 per cent, which is slightly lower than comparable instruments issued earlier. However, the 10-year bonds are priced at 19.00 per cent and 19.89 per cent respectively, reflecting the elevated interest rate environment and investor demand for higher returns to compensate for inflation risks and economic uncertainty.
A comparison with the January 2026 bond auction shows that while the February offer remains substantial, it is lower than the N900bn offered in the previous month. The January issuance included N300bn of a seven-year bond maturing in February 2031, N400bn of a 10-year bond maturing in February 2034, and N200bn of another 10-year bond maturing in January 2035. The reduction from N900bn in January to N800bn in February represents a decline of N100bn, equivalent to an 11.1 per cent decrease.
There are also notable differences in coupon rates between the two months. The seven-year bond coupon declined from 18.50 per cent in January to 17.95 per cent in February, suggesting a slight moderation in borrowing costs for that tenor. In contrast, the January auction included a 10-year bond with a significantly higher coupon rate of 22.60 per cent, which stands out as substantially above the rates attached to the 10-year bonds in the February offering. The lower coupon rates in February, while still high by historical standards, may indicate marginal improvements in market conditions or investor expectations.
Overall, the February 2026 bond issuance underscores the Federal Government’s continued dependence on domestic borrowing as a key financing strategy. The large size of the offering, combined with relatively high interest rates, reflects ongoing fiscal pressures and the need to raise funds to support budget implementation, infrastructure development, and other public expenditures.
At the same time, the emphasis on longer-term bonds indicates a strategic effort to manage debt more sustainably by reducing near-term repayment burdens and spreading obligations over a longer horizon. However, the elevated coupon rates also highlight the significant cost associated with domestic borrowing, which could increase debt servicing expenses in the coming years.
As Nigeria continues to navigate economic challenges, including inflation, currency pressures, and revenue constraints, the outcome of the February bond auction will be closely watched by investors, policymakers, and financial analysts. Strong investor participation would signal confidence in government securities, while weak demand could force the government to offer even higher yields to attract buyers.
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