Nigeria’s federal government is returning to the domestic debt market with a fresh bond offering that carries notable signals for fixed-income investors. The Debt Management Office published its May 2026 offer circular on May 12, outlining plans to raise N600 billion through two reopened instruments.

The auction is scheduled for May 18 with settlement on May 20, giving participants less than a week to position. For the first time in 2026, the DMO dropped shorter-dated instruments entirely and concentrated the full issuance on 10-year and 20-year tenors.

DMO splits N600bn offer between 10-year and 20-year FGN bonds

The May 2026 offer circular divides the N600 billion target evenly between two instruments, each sized at N300 billion. The first is a reopening of the 22.60% FGN January 2035 bond, a 10-year instrument that featured prominently in the April auction.

The second is a reopening of the 16.2499% FGN April 2037 bond, a 20-year instrument introducing longer-duration exposure to the 2026 calendar. Because both are reopenings, the coupon rates are already fixed, and successful bidders will pay a price corresponding to the yield-to-maturity that clears the auction.

FG’s monthly bond offer falls for the fifth straight month in 2026

The N600 billion May target extends a steady downward trend that has defined domestic borrowing throughout 2026, Channels Television confirmed. Offers fell from N900 billion in January to N800 billion in February, N750 billion in March, and N700 billion in April.

Despite the declining offer sizes, the government offered a combined N3.15 trillion in FGN bonds during the first four months of 2026, a 117% increase over the N1.45 trillion offered in the same period of 2025, THISDAY reported. The pattern suggests a deliberate recalibration of borrowing pace rather than a retreat from the domestic market.

Bond subscription demand jumped 87% in early 2026 as pension funds piled in

Investor appetite for FGN bonds has consistently outpaced offer sizes throughout 2026. Total subscriptions in the first four months reached N6.8 trillion, an 87% jump from N3.7 trillion in the same period of 2025, THISDAY reported.

The April auction saw investors submit N948 billion in bids for bonds worth only N700 billion, a 35.4% oversubscription rate, though the DMO ultimately allotted just N276.79 billion, Vanguard reported. The 22.60% FGN January 2035 bond alone drew N599 billion in bids from 154 successful applicants, according to the DMO’s published auction results.

“We anticipate that the Nigerian secondary bond market will maintain a stable to slightly bullish trajectory in the near term, bolstered by persistent local investor interest and an ongoing demand for fixed-income securities in the face of economic uncertainties.” — Cowry Asset Management, in a February 2026 research note, via DMarketForces

FGN bond yields hover near 16% as Nigeria’s debt hits N159 trillion

Average yields on FGN bonds stood at approximately 16.10% as of early May 2026, Naija247news reported, while the CBN’s benchmark rate remains at 26.5%. The 10-year yield held at 14.95% at the end of April, down 4.78 points year-over-year, Trading Economics data showed.

The auction unfolds against intensifying fiscal sustainability concerns from independent economists. Nigeria’s total public debt reached N159.28 trillion as of December 2025, the latest available figure, with domestic debt at 53.27% of the total, DMO data confirmed.

The NESG warned that the federal government could take on N29.2 trillion in new borrowings during 2026 to finance a widening deficit, TV360 Nigeria reported. Financial analyst Dr. Paul Alaje told Daily Trust that mounting debt carries direct consequences for ordinary Nigerians through higher taxation and servicing costs. Those payments reached N16.26 trillion in 2025, consuming roughly 69% of government revenue, Nairametrics reported, citing DMO data.

Key details from the May 2026 FGN bond offer

• Total offer size: N600 billion across two reopened instruments, per the DMO offer circular.
• Instruments: N300 billion of the 22.60% FGN January 2035 (10-year) and N300 billion of the 16.2499% FGN April 2037 (20-year).
• Auction date: May 18, 2026, with settlement on May 20, 2026.
• Minimum subscription: N50,001,000, with additional investments in multiples of N1,000.
• Both instruments are listed on the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange.

Why May 18 matters for the direction of Nigeria’s borrowing costs

In April, the DMO cleared the 10-year bond at a marginal rate of 16.59%, the 7-year at 16.50%, and the 5-year at 16.30%, according to the published auction results. The removal of shorter-dated instruments from the May offer means pricing pressure will concentrate entirely on the longer end of the curve.

DMO Director-General Patience Oniha stressed at the 2026 IMF Spring Meetings that Nigeria’s borrowing requires National Assembly approval under the Fiscal Responsibility Act and the DMO Act, Legit.ng reported, citing Punch. The auction will test whether reduced supply can sustain the bullish momentum that has defined the FGN bond market throughout 2026.