DMO cuts Q3 bond borrowing by up to N800bn, unveils new 10-y....

Nigeria’s Debt Management Office (DMO) has reduced the Federal Government’s planned bond borrowing for the third quarter of 2026 by as much as N800 billion, signalling a shift in the government’s domestic debt strategy as it introduces a new 10-year benchmark bond and places greater emphasis on longer-dated securities.

A review of the revised Q3 2026 FGN Bond Issuance Calendar released by the DMO showed that the indicative borrowing target has been lowered to between N3.4 trillion and N4.6 trillion, compared with the earlier projection of N4.2 trillion to N5.1 trillion.

The adjustment comes as the Federal Government reassesses its financing requirements amid evolving market conditions, although the DMO stressed that the calendar remains provisional and could be amended further depending on fiscal and market developments.

The biggest reductions are scheduled for the August and September bond auctions.

The August 17 auction has been cut to between N900 billion and N1.1 trillion, down from the earlier target of N1.2 trillion to N1.6 trillion. The offer size for the 22.60 per cent FGN January 2035 bond was slashed to N200 billion-N250 billion from the initial N600 billion-N800 billion.

Meanwhile, the 16.2499 per cent FGN April 2037 bond, which was initially excluded from the August programme, has been reintroduced with a modest allocation of N50 billion-N100 billion.

The 15.45 per cent FGN June 2038 bond retained the largest allocation for the August auction, with an offer size of N650 billion-N750 billion, making it the government’s principal fundraising instrument for the month.

Similarly, the September 14 auction has been reduced to between N1 trillion and N1.4 trillion, compared with the earlier plan of N1.2 trillion to N1.6 trillion.

A major highlight of the revised calendar is the introduction of the FGN September 2036 bond, a new 10-year benchmark security that replaces the planned reopening of the 22.60 per cent FGN January 2035 bond at the September auction.

The new bond will be offered alongside the reopening of the 15.45 per cent FGN June 2038 bond, with each carrying an indicative offer size of N500 billion-N700 billion.

The debut of the September 2036 instrument provides investors with a fresh benchmark for pricing medium-term government securities while broadening the Federal Government’s domestic debt portfolio.

The revised programme also establishes the 15.45 per cent FGN June 2038 bond as the DMO’s anchor security for the quarter. The bond features in all three auctions scheduled for July, August and September, while the 22.60 per cent FGN January 2035 appears only in the July and August auctions.

By contrast, the 16.2499 per cent FGN April 2037 bond has the least exposure, appearing at full allocation only in the July auction and at a significantly smaller size in August.

The July 20 auction remains unchanged, with the DMO offering three reopened issues, the 22.60 per cent FGN January 2035, 16.2499 per cent FGN April 2037, and 15.45 per cent FGN June 2038 bonds, for a combined target of N1.5 trillion to N2.1 trillion.

The lower quarterly borrowing target suggests the Federal Government may be responding to improved liquidity conditions or reduced immediate financing requirements.

The decision also contrasts sharply with the DMO’s recent expansion of its Treasury Bills programme, where planned issuance for the second quarter of 2026 was increased by N850 billion to N4.8 trillion, indicating a greater reliance on short-term instruments while moderating longer-term bond issuance.

Market analysts said the increased prominence of the June 2038 bond reflects the government’s preference for locking in longer-term funding, while the introduction of the September 2036 bond creates a new reference point for pricing 10-year sovereign debt.

They added that demand at the August and September auctions will provide an important gauge of investor appetite for long-dated Federal Government securities, particularly among pension fund administrators, asset managers and bank treasury desks, at a time when domestic borrowing costs remain elevated.