FG Borrows N7.6 Trillion From Nigerians As Domestic Debt Rises in H1 2026
- The FG borrowed a net N7.6 trillion from the domestic debt market between January and June 2026
- Cordros Securities' market report showed Treasury bill issuances surged 59.8% year-on-year to N12.75 trillion
- The investment firm warned that yields will remain elevated in the second half of 2026
The Federal Government drew a net N7.6 trillion from Nigeria's domestic debt market in the first six months of 2026, leaning heavily on local investors to fund its budgetary commitments through Treasury bills and Federal Government of Nigeria (FGN) bonds.
The figures emerged from a market review and outlook report by Cordros Securities, titled *Nigeria in 2026: Recovery to Realignment*, which detailed how the Debt Management Office (DMO) raised N3.18 trillion through Treasury bills and N4.42 trillion via FGN bonds over the period.
The report described the scale of domestic borrowing as among the highest recorded in recent years.
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Treasury Bill Demand Surges
Treasury bill issuances climbed 59.8% year-on-year to N12.75 trillion, with investor appetite remaining robust. Total subscriptions reached N38.67 trillion, nearly three times the volume offered and slightly above the 2.8 times subscription ratio recorded during the same period in 2025, the Sun reports.
Total allotments rose 68.9% to N14.36 trillion.
The flood of new supply, however, pushed average Treasury bill yields up by 106 basis points to 18.7% across the first half of the year.
Activity in the bond market followed a broadly similar pattern, though investor demand was comparatively subdued. The DMO issued N4.95 trillion in FGN bonds, a 25.1% increase from the corresponding period in 2025, while total allotments grew 70.7% to N4.42 trillion.
Total subscriptions stood at N8.76 trillion, with the bid-to-offer ratio declining to 1.8 times from 2.2 times a year earlier.
Cordros attributed the softer appetite to elevated interest rates and shifting expectations around the Central Bank of Nigeria's monetary policy direction, with heavy bond supply in June placing additional upward pressure on borrowing costs.
Benchmark FGN bond yields rose 123 basis points to 17.8%, with short-term and medium-term bonds reaching 18.2% and 18.3%, respectively, while long-term bond yields climbed more modestly to 16.2%.
The March 2027, January 2035, and April 2037 FGN bonds recorded the sharpest individual yield increases.
Despite the supply pressure, overall investor participation remained relatively firm, underpinned by ample system liquidity. Large volumes of Central Bank of Nigeria Open Market Operation (OMO) bills reaching maturity injected fresh funds into the financial system, sustaining demand at both primary auctions and in the secondary market.
Although the apex bank issued new OMO bills to absorb excess liquidity, the net effect remained broadly supportive.
Foreign investors investment
Foreign investors also contributed meaningfully, drawn by attractive yields on Nigerian fixed-income assets. National Bureau of Statistics data cited in the Cordros report put foreign inflows into the fixed-income market at approximately $9.76 billion in the first quarter of 2026 alone.
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Looking to the second half of the year, Cordros Securities cautioned that a continued mismatch between government financing requirements and investor capacity could keep yields high.
The firm said that while stronger foreign participation and easing geopolitical tensions may offer some relief, those factors would only moderate, rather than reverse, the effect of sustained large-scale borrowing, leaving market conditions volatile through the remainder of 2026.
Lagos, Rivers top Nigeria’s debt charts
Earlier, Legit.ng reported that Lagos and Rivers States have emerged among the top indebted subnational governments in Nigeria as new data from the Debt Management Office (DMO) on Friday, April 17, shows a sharp rise in both domestic and external debt between 2024 and 2025.
Analysis showed that states' debt profile revealed that total external debt rose to $51.81 billion in 2025, up from $45.78 billion in 2024.
Domestic debt across the 36 states and the Federal Capital Territory (FCT) increased to N4.36 trillion, compared to N3.97 trillion in 2024.
Source: Legit.ng
