FG to borrow N800bn via February bonds

The Debt Management Office has unveiled plans to raise N800bn through its February 2026 Federal Government bond auction, reflecting a sharp increase compared to the corresponding period last year, though lower than the record N900bn offered in January.

According to the bond offer circular published on the agency’s website on Monday, the offer consists of N400bn of 17.95 per cent FGN JUN 2032 (seven-year re-opening), N300bn of 19.89 per cent FGN MAY 2033 (10-year re-opening), and N100bn of 19.00 per cent FGN FEB 2034 (10-year re-opening), bringing the total to N800bn.

The auction is scheduled for February 23, 2026, with settlement on February 25, 2026. In February 2025, the DMO offered N350bn, comprising N200bn of 19.30 per cent FGN APR 2029 (five-year re-opening) and N150bn of 18.50 per cent FGN FEB 2031 (seven-year re-opening).

The planned N800bn issuance for February 2026 represents a year-on-year increase of N450bn, translating to a 128.6 per cent rise. This means the Federal Government is seeking more than double the amount offered in February 2025.

The maturity structure also shows a shift. While the February 2025 offer included a five-year instrument, the February 2026 issuance is concentrated entirely on seven-year and 10-year tenors, indicating an attempt to lengthen the average maturity of domestic debt and reduce near-term refinancing pressure.

On pricing, borrowing costs remain elevated. The seven-year bond carries a coupon of 17.95 per cent, slightly lower than the 18.50 per cent on the comparable tenor in February 2025.

However, the 10-year instruments are priced at 19.00 per cent and 19.89 per cent, in line with the prevailing high interest rate environment. A month-on-month comparison shows that the February offer is N100bn lower than January’s N900bn, representing an 11.1 per cent decline.

In January 2026, the DMO offered N300bn of 18.50 per cent FGN FEB 2031 (seven-year re-opening), N400bn of 19.00 per cent FGN FEB 2034 (10-year re-opening), and N200bn of 22.60 per cent FGN JAN 2035 (10-year re-opening).

The seven-year coupon has declined from 18.50 per cent in January to 17.95 per cent in February. Notably, the 10-year FGN JAN 2035 bond offered in January carried a 22.60 per cent coupon, significantly higher than the 19.89 per cent and 19.00 per cent attached to the February 2026 10-year papers.

Taken together, although the February offer is lower than January’s record level, it remains more than twice the size of the February 2025 issuance and is priced at rates close to 18 to 20 per cent, highlighting the elevated cost of domestic debt financing.(Punch)