FGN bond clearing rates rise to as much as 17.29% at the first auction since the MPC cut
The October auction was the largest offer of the year, and investors bid for less than the DMO put up.
Key findings
- The 16.79% FGN SEP 2036 cleared at 17.29%, up 0.50 percentage points from 16.79% in September.
- The 15.45% FGN JUN 2038 cleared at 17.19%, up 0.34 percentage points from 16.85%.
- The DMO offered ₦1.75 trillion across three bonds and received bids of ₦1,747.75 billion, just short of the offer.
- Bids for the 19% FGN FEB 2034 came to ₦304.08 billion against ₦500 billion offered.
- The rise came after the MPC cut the policy rate by 3.5 percentage points to 23% on 22 September.
The Debt Management Office's October auction of FGN bonds cleared at higher rates than the September sale. The 16.79% FGN SEP 2036 bond cleared at 17.29%, up 0.50 percentage points from 16.79% on 14 September. The 15.45% FGN JUN 2038 cleared at 17.19%, up 0.34 percentage points from 16.85%. A third bond, the 19% FGN FEB 2034, was reopened at 16.99%. All three were reopenings of existing bonds, settled on 21 October.
The auction on 19 October was the first since the Monetary Policy Committee cut the Monetary Policy Rate by 3.5 percentage points to 23% from 26.5% on 22 September. Lower policy rates usually pull government borrowing costs down. At this auction, long-dated rates rose instead.
The DMO offered ₦1.75 trillion, its largest monthly bond offer this year, up from ₦1,000 billion in September. Bids came to ₦1,747.75 billion, just short of the offer, after September's ₦1,494.73 billion of bids covered that month's offer 1.49 times. Demand was uneven across the curve. The SEP 2036 bond drew ₦925.35 billion of bids against ₦800 billion offered, and ₦781.31 billion was allotted to the market. The FEB 2034 bond drew only ₦304.08 billion against ₦500 billion, and ₦78.36 billion was allotted to the market.
| Bond | Offered | Bids | Allotted to market | Clearing rate |
|---|---|---|---|---|
| 19% FGN FEB 2034 | 500 | 304.08 | 78.36 | 16.99 |
| 16.79% FGN SEP 2036 | 800 | 925.35 | 781.31 | 17.29 |
| 15.45% FGN JUN 2038 | 450 | 518.32 | 350.72 | 17.19 |
- SEP 2036 clearing rate
- 17.29%
- JUN 2038 clearing rate
- 17.19%
- Monetary Policy Rate
- 23%
The MPC lowered the policy rate to 23% in September.
Why it matters
Bond clearing rates set what the federal government pays to borrow for a decade or more. With headline inflation at 14.63% in September, the SEP 2036 rate of 17.29% leaves investors a wide margin over inflation, and the DMO accepted higher rates to sell a much larger offer. A large offer met by thinner demand suggests that the supply of government paper, not only the policy rate, is now setting long-term yields. If that persists, the benefit of the rate cut to the government's own borrowing costs will be smaller than the headline cut implies.
What to watch
- The November FGN bond auction: its offer size and whether clearing rates ease or rise again.
- Treasury bill auctions, for whether short-term rates follow the policy rate down while long-term rates do not.
- October inflation, due from the NBS in November, and the MPC's next meeting.
SourceSummary of FGN Bond Auction Results for October, 2026 (opens in a new tab)Debt Management Office
Methodology
Auction results are from the DMO's summary of the 19 October 2026 FGN bond auction and the 14 September 2026 auction, as held in Dataminal's government securities dataset. Clearing rates are the marginal (stop) rates, not coupons, and changes are the difference between the two auctions for the same bond in percentage points. Allotments are amounts allotted to the market at the competitive auction; non-competitive allotments are excluded. Monthly offers and bids sum every bond line in the month. The policy rate is from the MPC decision of 22 September 2026 and inflation from the NBS September CPI.