The Debt Management Office (DMO) has increased borrowing costs at its latest Federal Government (FGN) bond auction conducted on Monday, March 30, while significantly cutting allotments to N485.50 billion. This is according to the auction results of reissued FGN Bonds seen on Tuesday, which show a sharp rise in stop rates compared to previous auctions in early February and mid-March 2026.

Despite strong investor demand, the DMO hiked the rates across the mid- and longer maturities above previous stop rates, marking a shift in yield dynamics.

The latest FGN bond auction recorded strong investor interest, with total subscriptions exceeding the amount offered. However, the DMO opted for a more conservative allotment approach, signaling a possible attempt to manage rising debt costs.

• The auction featured the reopening of the AUG-2030, JUN-2032, and MAY-2033 bonds.
• It recorded total subscriptions of N931.50 billion against an offer of N750 billion.
• Only N485.50 billion was allotted.
• The MAY-2033 bond attracted N462.21 billion in subscriptions against an offer of N300 billion; the DMO allotted N332.71 billion, the largest share of total sales.
• The AUG-2030 bond saw N251.43 billion in bids versus N250 billion offered, with only N88.80 billion allotted.
• While the JUN-2032 bond recorded N217.87 billion in subscriptions with just N64 billion allotted out of N200 billion offered.

Demand remained concentrated on longer-tenor instruments despite robust demand across all maturities.

The increase in stop rates at the auction indicates a rise in the government’s borrowing costs, marking a departure from earlier easing trends observed in the fixed-income market.

• The stop rate for the JUN-2032 bond rose by 41 basis points to 16.15%, while the MAY-2033 bond increased sharply by 90 basis points to 16.64%.
• The AUG-2030 bond cleared at 16.00%, further confirming elevated yield levels across the yield curve.
• Compared to the previous auction, where both the 2032 and 2033 bonds cleared at 15.74%, the latest rates represent a notable upward repricing.
• The higher yields suggest that investors are demanding greater returns to compensate for perceived risks such as inflationary pressures and fiscal uncertainties.

Overall, the surge in stop rates underscores a shift in market expectations, with investors pricing in higher risk premiums.

The re-issued FGN bonds were originally offered at much higher stop rates than the current prevailing rates.