February sale oversubscribed 3.4x, marginal rates fall by up to 202 basis points amid improving funding conditions….
Investor appetite for Federal Government securities strengthened in February 2026, with total subscriptions rising to ₦2.70 trillion at the latest bond auction even as the Debt Management Office (DMO) sharply reduced allotments and marginal rates declined across all maturities.
Auction results released by the DMO show that ₦800 billion was offered across three reopened instruments on February 23, 2026:
- 95% FGN JUN 2032
- 89% FGN MAY 2033
- 00% FGN FEB 2034
Demand Surges Across All Tenors
The seven-year 17.95% FGN JUN 2032 bond attracted ₦851.59 billion in subscriptions against ₦400 billion offered.
The nine-year 19.89% FGN MAY 2033 recorded ₦874.69 billion in bids for ₦300 billion on offer.
The 10-year 19.00% FGN FEB 2034 drew the strongest demand, with ₦972.93 billion in subscriptions for just ₦100 billion offered.
Combined, total bids reached ₦2.70 trillion for ₦800 billion offered, translating to a bid-to-offer ratio of approximately 3.4 times.
This marks a notable improvement from the January 26, 2026 auction, which recorded ₦2.25 trillion in subscriptions against ₦900 billion offered, representing a bid-to-offer ratio of about 2.5 times. Month-on-month, demand increased by roughly ₦446 billion.
Government Exercises Restraint
Despite the surge in demand, the DMO adopted a cautious borrowing stance.
Total competitive allotments in February stood at ₦524.28 billion, broken down as:
- ₦188.14 billion for the 2032 bond
- ₦208.63 billion for the 2033 bond
- ₦127.51 billion for the 2034 bond
In contrast, January’s auction saw ₦1.54 trillion allotted competitively, alongside ₦130.72 billion through non-competitive bids.
The February figure represents a drop of about 66 per cent in competitive allotments month-on-month, indicating deliberate moderation in domestic borrowing despite ample liquidity in the market.
Yields Fall Sharply
Pricing conditions improved significantly at the February auction.
Marginal rates settled at:
- 74% for the 7-year bond
- 74% for the 9-year bond
- 50% for the 10-year bond
These compare favourably to January’s higher stop rates of:
- 62% for the 7-year bond
- 50% for the FEB 2034 bond
- 52% for the JAN 2035 bond
On a month-on-month basis:
- The 7-year yield declined by 188 basis points.
- The FEB 2034 bond fell by 176 basis points.
- The comparable 10-year yield dropped by as much as 202 basis points.
Bid ranges also reflected easing yield pressure. In February, bids for the 7-year bond ranged between 14.90% and 20.00%. By comparison, January’s 2035 bond saw bids climb as high as 25.90%, underscoring the elevated volatility seen in the previous month.
Notably, the DMO maintained the original coupon rates on all instruments, meaning the stop rate reflects the clearing yield for successful bids rather than any adjustment to coupon structures.
Improving Funding Conditions
February’s outcome signals strengthening investor confidence in Federal Government debt instruments. Robust demand, sharply lower yields, and restrained issuance collectively point to improving funding conditions.
For policymakers, the ability to borrow at lower marginal rates while limiting overall issuance suggests a more favourable domestic debt environment, one that could ease pressure on public finance costs in the months ahead.
