The Federal Government has unveiled plans to raise up to ₦900 billion from the domestic debt market through its January 2026 bond auction, effectively doubling the ₦450 billion target set for the same period last year.
Details contained in offer documents released by the Debt Management Office (DMO) show that the January 2026 auction will involve the reopening of three Federal Government of Nigeria (FGN) bonds with a total offer size of ₦900 billion. This represents a 100 per cent year-on-year increase compared to the January 2025 issuance.
The strategy reflects mounting fiscal pressure and increasing refinancing demands, as the government turns more aggressively to the local bond market to meet its funding needs.
By comparison, the January 2025 bond auction indicated a more cautious borrowing approach, despite the prevailing high interest rate environment at the time.
Reports indicate that the DMO last year offered bonds across five-year, seven-year and ten-year tenors, targeting a total of ₦450 billion. The breakdown included ₦100 billion from a five-year April 2029 bond with a 19.30 per cent coupon, ₦150 billion from a seven-year February 2031 bond at 18.50 per cent, and ₦200 billion from a newly issued 10-year January 2035 bond.
The relatively modest size of that offer reflected lower funding requirements at the time.
In contrast, the January 2026 auction highlights a stronger dependence on domestic borrowing. According to the offer circular, the government plans to raise ₦300 billion from a reopening of the 18.50 per cent FGN February 2031 bond, ₦400 billion from the 19.00 per cent FGN February 2034 bond, and ₦200 billion from the 22.60 per cent FGN January 2035 bond.
This represents a notable shift both in the scale of borrowing and the mix of instruments on offer.
The structure of the auction also points to a growing preference for longer-term debt. Ten-year bonds alone account for ₦600 billion, roughly two-thirds of the total January 2026 offer, compared with just ₦200 billion in 10-year bonds issued in January 2025.
Borrowing Costs Stay High
Coupon rates on the reopened bonds remain elevated, reflecting tight monetary conditions, persistent inflationary pressures and investors’ demand for higher yields.
In particular, the 22.60 per cent coupon on the January 2035 bond highlights a sharp increase compared to similar tenors a year earlier, underscoring the rising cost of borrowing for the Federal Government.
The DMO noted that the bonds will be issued at ₦1,000 per unit, with a minimum subscription of ₦50.001 million. Interest payments will be made semi-annually, while the principal will be repaid in full at maturity under a bullet repayment structure.
For reopened bonds, successful bidders will pay prices determined by the clearing yield at the auction, in addition to accrued interest.
Despite plans to significantly expand its January bond issuance, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the government aims to increasingly depend on domestic resources while cutting back on borrowing.
Speaking in an interview on Bloomberg Television at the World Economic Forum in Davos, Switzerland, Edun said the administration is placing stronger emphasis on revenue generation.
“The focus now is on revenue and domestic resource mobilisation,” he said. “We hope to rely less on borrowing.”
He added that although Nigeria could still tap international capital markets if needed, the government’s priority is to strengthen domestic revenue streams, improve tax collection, and enhance fiscal sustainability amid global economic challenges.
According to Edun, these steps are essential to reducing long-term dependence on debt while stabilising public finances.