FG borrows N7.15trn through bonds in nine months as domestic

The Federal Government has allotted N7.15 trillion through FGN bonds in the first nine months of 2026, more than double the amount raised in the corresponding period of 2025, underscoring the government’s growing dependence on the domestic capital market to finance its obligations.

Analysis of Debt Management Office (DMO) auction results showed that bond allotments rose 106 per cent from N3.48 trillion between January and September 2025 to N7.15 trillion in the same period this year. The DMO’s official auction records cover monthly issuances from January through September 2026.

The increase represents an additional N3.67 trillion mobilised from investors within nine months, with the sharpest increases recorded in June, July and August.

In June, the DMO allotted N1.22 trillion in FGN bonds, compared with just N100 billion a year earlier. January allotments rose 157 per cent to N1.54 trillion from N601.04 billion, while July jumped 401 per cent to N931.82 billion from N185.93 billion.

August recorded an even larger year-on-year increase, with allotments rising 491 per cent to N805.16 billion from N136.16 billion. September followed with N748.64 billion, up 29.8 per cent from N576.62 billion in September 2025.

The scale of borrowing becomes clearer when measured against investor appetite. Subscribers submitted bids worth N13.72 trillion for FGN bonds during the nine-month period, leaving about N6.57 trillion of demand above the amount ultimately allotted.

February attracted the largest monthly subscriptions at N2.70 trillion, followed by January with N2.25 trillion. July generated N1.70 trillion in bids, while August and September attracted N1.35 trillion and N1.36 trillion respectively.

The sustained demand for government securities provides the Federal Government with access to large pools of domestic savings at a time when fiscal financing needs remain substantial.

But the rising use of the domestic market carries wider implications for the economy because banks, pension funds, insurers and other institutional investors are among the major buyers of government securities.

As sovereign borrowing increases, private companies seeking funds for factories, equipment, working capital and expansion may have to compete more aggressively for the same pool of investable funds, particularly when government securities offer attractive risk-adjusted returns.

The debt numbers underline the scale of the financing challenge. Nigeria’s total public debt stood at N166.79 trillion at the end of June 2026, up from N159.35 trillion three months earlier. Domestic debt accounted for N91.59 trillion, while FGN bonds alone represented N64.84 trillion, or 74.5 per cent of Federal Government domestic debt.

The comparison with June 2023 is also striking. Total public debt was N87.38 trillion shortly after the current administration took office, meaning the stock has increased by about N79.41 trillion over three years. The rise reflects multiple borrowing instruments and should not be attributed to FGN bond auctions alone.

The latest figures therefore point to a government increasingly reliant on the bond market to meet funding requirements, even as investor appetite remains strong.

The economic test is whether the heavy mobilisation of domestic savings can translate into productive public investment without permanently crowding out businesses that need long-term financing to expand production, create jobs and support economic growth.