October 15, 2026/CSL Update
The Debt Management Office (DMO) plans to raise ₦5.75tn through FGN bond offers in Q4 2026, comprising ₦1.75tn in October and ₦2.0tn each in November and December. This follows the allotment of ₦7.15tn in FGN bonds between January and September 2026, more than double the ₦3.48tn recorded in the corresponding period of 2025.
The elevated issuance reflects the government’s substantial domestic financing requirements amid an expanded 2026 expenditure budget and persistent revenue shortfalls. In our H2 2026 outlook (see CSL Research H2 2026 Outlook: “ Improving fundamentals support a cautiously optimistic view”, 14 July), we projected a fiscal deficit of ₦26.7tn, equivalent to 5.3% of GDP, and estimated that net domestic issuances could exceed ₦11.5tn in H2 2026, highlighting the scale of the government’s funding needs.
Looking ahead, the recovery in crude oil production could provide some support to fiscal revenue. Nigeria’s crude oil and condensate output rose by 2.3% m/m to 1.72mbpd in September from 1.68mbpd in August, marking its highest monthly average since June. Meanwhile, crude-only production averaged 1.53mbpd, exceeding Nigeria’s OPEC quota of 1.50mbpd for the fifth consecutive month. Combined with elevated global oil prices, sustained production gains could boost export earnings and government revenue. However, the extent of the benefit will depend on production costs, the government’s share of oil earnings and statutory deductions. As highlighted in our H2 outlook, higher oil prices may not translate proportionately into stronger net oil receipts. Consequently, the improvement in oil production is encouraging, but its impact on domestic borrowing requirements will depend on whether higher gross oil earnings translate into increased government revenue.
In the fixed-income market, the 350-basis-point cut in the MPR initially supported a decline in yields across Treasury bills and FGN bonds. However, yields have since partially rebounded, rising by 10 basis points to 18.0% for Treasury bills and by 30 basis points to 15.9% for FGN bonds as of 9 October, although both remain below their pre-cut levels.
Looking ahead, the planned ₦5.75tn in Q4 bond offers could sustain upward pressure on bond yields by increasing the supply of government securities. Meanwhile, ₦7.46tn in OMO and Treasury bill maturities expected in October could support reinvestment demand, although fresh OMO issuance may absorb some of the resulting liquidity. On balance, substantial government borrowing could limit further yield compression and trigger intermittent repricing, notwithstanding potential support from reinvestment demand. Accordingly, we maintain our preference for positioning at the short-to-medium end of the yield curve, consistent with our H2 2026 fixed-income strategy.
Click here to download full report: CSL Nigeria Daily – 15 October – Fixed Income