The Federal Government of Nigeria (FG) has intensified its domestic borrowing program for the 2026 fiscal year, unveiling plans to raise ₦800 billion through its February bond auction. The announcement, made by the Debt Management Office (DMO) on Monday, February 16, 2026, reflects a significant 128% year-on-year increase compared to the ₦350 billion offered in February 2025, signaling the government’s mounting reliance on local debt markets to fund critical budgetary obligations.
The February offer is structured as a re-opening of three existing benchmark instruments, focusing heavily on medium-to-long-term tenors. According to the DMO’s offer circular, the government is seeking ₦400 billion from the 17.95% FGN JUN 2032 (7-year re-opening), ₦300 billion from the 19.89% FGN MAY 2033 (10-year re-opening), and ₦100 billion from the 19.00% FGN FEB 2034 (10-year re-opening). Market analysts note that by concentrating on 7-year and 10-year instruments, the DMO is strategically attempting to lengthen the average maturity of Nigeria’s domestic debt, thereby reducing immediate refinancing pressures.
Interest rates in the fixed-income market remain elevated, driven by the Central Bank of Nigeria’s (CBN) hawkish monetary stance to curb inflation, which stood at 15.10% in January. While the 7-year coupon of 17.95% is a slight dip from January’s 18.50%, the 10-year instruments continue to command rates near the 20% mark.
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This high-yield environment has successfully attracted significant domestic liquidity; earlier this month, the FGN Savings Bond alone recorded ₦5.9 billion in subscriptions from retail investors between February 2nd and 6th, underscoring a strong appetite for government-backed securities despite broader economic headwinds.
Financing experts suggest that the proceeds from these auctions are being channeled toward narrowing the 2026 budget deficit and servicing legacy debts in critical sectors. Specifically, the government recently utilized a ₦501 billion inaugural power sector bond in late January to settle long-standing arrears owed to power generation companies (GenCos). The continued issuance of high-interest bonds, however, raises questions about the long-term sustainability of debt-servicing costs, which are projected to consume a substantial portion of the federation’s revenue in the coming years.
As the auction date of Monday, February 23, 2026, approaches, institutional investors, including pension fund administrators and commercial banks, are expected to dominate the bidding process. The DMO has maintained that this borrowing strategy is part of a “transparent capital market financing” plan designed to support the growth of Nigeria’s domestic debt market while providing stable, long-term returns for investors. For the finance sector, the success of this ₦800 billion raise will be a key indicator of market confidence in the administration’s fiscal discipline for the remainder of the year.
