The Federal Government raised ₦5.08 trillion from the domestic bond market between January and June 2026, representing a 77.8 per cent increase from the ₦2.86 trillion secured during the same period in 2025, according to the Debt Management Office (DMO).
The latest figures highlight the Tinubu administration’s growing reliance on the domestic debt market to finance budgetary commitments, with borrowing increasing by ₦2.22 trillion compared to the first half of last year. Despite the higher borrowing volume, the government’s financing costs eased as average marginal interest rates declined below 2025 levels.
The DMO data also showed sustained investor confidence in Federal Government securities, with total subscriptions climbing to more than ₦9.04 trillion, more than double the ₦4.37 trillion recorded in the corresponding period of 2025. However, analysts noted that although investor demand remained strong, it fell short of the pace of the government’s expanded borrowing programme.
Within the six-month period, the government offered ₦4.95 trillion worth of bonds, a significant increase from the ₦1.85 trillion offered during the same period last year, reflecting a more aggressive domestic debt strategy.
January recorded the highest borrowing, with bond allotments reaching ₦1.68 trillion, followed by ₦1.22 trillion in June. Borrowing activity also remained strong in May, when total allotments rose to ₦894.51 billion, including non-competitive allocations.
Although borrowing increased substantially, the cost of raising funds declined. Marginal rates ranged between 15.50 per cent and 18.35 per cent, compared to 17.75 per cent to 22.60 per cent during the first half of 2025. The lower average borrowing rate indicates that the government was able to secure larger volumes of funding at relatively cheaper rates.
Among the instruments offered, the 22.60 per cent FGN January 2035 Bond emerged as the government’s largest fundraising vehicle, attracting subscriptions worth about ₦2.30 trillion and accounting for roughly ₦1.52 trillion in allotments. The FGN April 2037 Bond also enjoyed strong investor demand, recording subscriptions exceeding ₦1.24 trillion.
Foreign investors also maintained confidence in Nigeria’s debt market. Data from the National Bureau of Statistics (NBS) showed that overseas investors injected $3.23 billion into Nigerian bonds during the first quarter of 2026, representing a 267.67 per cent increase compared to the same period in 2025.
Despite the strong appetite for government securities, economic experts warned against excessive dependence on domestic borrowing. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, cautioned that rising government borrowing could crowd out private sector lending, as banks increasingly channel funds into government securities because of their attractive returns and lower investment risks.
Market analysts also projected that bond yields would likely remain elevated through the third quarter of 2026 due to persistent inflation, tight monetary policy and ongoing fiscal pressures. They advised investors to remain cautious and await stronger signs of economic stability before making long-term fixed-income investment decisions.
