The Federal Government raised N2.69 trillion from the domestic bond market in the first quarter of 2026, driven by robust investor demand that consistently exceeded offer levels, according to data from the Debt Management Office.
An analysis of auction results for January, February, and March showed that the government offered a total of N2.45 trillion in bonds during the period, while investors submitted subscriptions worth N5.88 trillion. Of this amount, about 45.64 per cent was allotted, indicating that less than half of the bids were accepted despite strong demand.
The figures reflect an oversubscription rate of about 240 per cent, meaning total bids were more than twice the amount offered. On a strictly competitive basis, the allotment ratio was slightly lower at 43.42 per cent.
Compared to the same period in 2025, the government significantly increased its borrowing. Total allotments rose from N1.94 trillion in the first quarter of 2025 to N2.69 trillion in 2026—an increase of N750.08 billion or 38.76 per cent. Subscriptions more than doubled, climbing from N2.83 trillion to N5.88 trillion, while the offer size expanded from N1.10 trillion to N2.45 trillion.
However, the proportion of bids accepted dropped from 68.32 per cent in 2025 to 45.64 per cent in 2026, suggesting a more cautious borrowing strategy despite heightened investor appetite.
Borrowing activity was heavily concentrated in January. The government offered N900 billion and received subscriptions of N2.25 trillion, ultimately allotting N1.68 trillion—equivalent to 74.37 per cent of subscriptions and 186.16 per cent of the offer size. This marked a sharp increase from January 2025, when N601.04 billion was allotted.
In February, although subscriptions surged to N2.70 trillion—the highest in the quarter—only N524.28 billion was allotted from an offer of N800 billion. This meant just 19.42 per cent of bids were accepted, highlighting a wide gap between demand and actual borrowing. The figure also represents a decline from the N910.39 billion allotted in February 2025.
By March, market activity moderated. The government offered N750 billion, received N931.50 billion in subscriptions, and allotted N485.50 billion. This translates to a subscription rate of 124.20 per cent and an acceptance rate of 52.12 per cent. Compared to March 2025, allotment rose modestly by 14.59 per cent.
Month-on-month data shows a steady reduction in offer size—from N900 billion in January to N800 billion in February and N750 billion in March. Subscriptions, however, peaked in February before dropping sharply in March.
Similarly, total allotments declined from N1.68 trillion in January to N524.28 billion in February and N485.50 billion in March, underscoring the concentration of borrowing in the first month of the quarter.
Marginal rates declined significantly compared to 2025, indicating lower borrowing costs. In January 2026, rates ranged between 17.50 per cent and 17.62 per cent, down from over 21 per cent in January 2025.
Rates fell further in February to between 15.50 per cent and 15.74 per cent, compared to about 19 per cent in the same period last year. Although rates edged up slightly in March to between 16.00 per cent and 16.64 per cent, they remained below March 2025 levels.
Overall, the data suggests that the government benefited from improved market conditions and strong investor confidence, even as it maintained restraint in the volume of bids accepted.
The Federal Government plans to raise N700 billion from the bond market in April 2026, continuing a gradual reduction in offer size. The issuance, scheduled for April 27 with settlement on April 29, will involve the reopening of existing instruments across three maturities to enhance liquidity.
Despite favourable market conditions, concerns remain over rising domestic borrowing. Economist Muda Yusuf warned that increased government borrowing could crowd out private sector access to credit, as financial institutions prefer the safety and attractive returns of government securities over lending to businesses.
He urged the government to moderate its borrowing to avoid constraining growth in the real sector.
