FG raises ₦5.08 trillion from bonds, up 77.8% from 2025

The Federal Government raised ₦5.08 trillion from the domestic bond market in the first half of 2026, a 77.8% increase from the same period in 2025.

The Federal Government raised ₦5.08 trillion from the domestic bond market in the first half of 2026, a 77.8 percent increase from the ₦2.86 trillion raised during the same period in 2025, reflecting a more aggressive borrowing strategy to finance its fiscal needs. Analysis of the Debt Management Office's auction results showed that investor demand remained strong, with total subscriptions exceeding ₦9 trillion despite a sharp increase in bond issuance.

The government offered ₦4.95 trillion in bonds during the period, up from ₦1.85 trillion a year earlier, while borrowing costs eased as average marginal rates declined relative to 2025. January and June recorded the highest borrowings, while long-term bonds attracted the strongest investor interest. Economists, however, cautioned that rising government borrowing could crowd out private sector lending and increase debt-servicing costs. Analysts expect bond yields to remain elevated through the third quarter of 2026, supported by persistent inflation and a cautious monetary policy stance.

The surge in borrowing reflects the government’s widening fiscal deficit. The 2026 budget, with a deficit of ₦34.5 trillion, requires massive borrowing to fund recurrent and capital expenditure. The government has chosen to borrow domestically rather than externally, a decision driven by the high cost of foreign borrowing and the desire to reduce external debt exposure. But domestic borrowing has its own costs: higher interest rates, crowding out of private sector credit, and increased debt service obligations.

This mirrors the 2015 borrowing surge, when the government also ramped up domestic borrowing to fund the budget amid falling oil revenues. The mechanism then was different, but the result was the same: higher debt, higher interest costs, and a growing burden on future generations.

The winners: the government, which has access to cheap domestic funding, and investors, who earn returns on government bonds. The losers: the private sector, which faces higher borrowing costs, and the Nigerian public, which ultimately bears the cost of the debt through higher taxes and reduced public services.

Bottom Line: The government borrowed ₦5.08 trillion in six months. That is more than it borrowed in all of 2025. The debt is growing. The question is whether the spending will be worth it.