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The short answer
FGN bonds are naira debt securities issued by the Federal Government through the Debt Management Office, usually at monthly auctions, with tenors of several years. They pay a fixed coupon every six months and repay the face value at maturity; at auction the minimum subscription is ₦50,001,000, but individuals can buy smaller amounts in the secondary market through brokers and banks.
Key features
| Feature | FGN bond |
|---|---|
| Issuer | Federal Government of Nigeria, through the DMO |
| Primary market | Monthly auctions, mainly through Primary Dealer Market Makers (PDMMs) |
| Unit of sale | ₦1,000 per unit |
| Minimum at auction | ₦50,001,000, then multiples of ₦1,000 |
| Coupon | Fixed, paid every six months |
| Repayment | Face value in one payment at maturity (bullet) |
| Listing | Listed on NGX and FMDQ; traded mainly over the counter on FMDQ |
| Status | Backed by the full faith and credit of the Federal Government; qualify as liquid assets for banks and as trustee investments |
Why the government issues bonds
The Federal Government borrows to cover the gap between its revenue and spending in the budget, and to refinance debt that is falling due. Domestic bonds let it borrow in naira, which avoids exchange rate risk on repayment, and spread repayments over many years. The DMO publishes an annual borrowing plan and a medium-term debt strategy that set out how much it expects to raise from bonds, bills, sukuk and external sources. Pension funds, banks, insurers, asset managers and foreign portfolio investors are the main buyers, because they need long-term naira assets that match long-term liabilities.
How a bond auction works
- The DMO publishes the offer: which bonds (new issues or reopenings of existing ones), amounts and the auction date.
- PDMMs submit competitive bids stating yields and amounts, on their own account and for clients. Non-competitive bids may also be accepted.
- The DMO ranks bids by yield and allots up to the amount it chooses, setting a marginal (stop) rate for each bond.
- For a new bond the coupon is set from the auction outcome. For a reopening the coupon is already fixed, so buyers pay a price above or below face value that gives them the auction yield.
- Results are published and bonds settle a few days later.
Coupons, prices and yields
The coupon is fixed when the bond is first issued. The price moves with market yields: when yields rise, existing bonds with lower coupons are worth less, so their price falls; when yields fall, prices rise.
Worked example (example figures)
| Item | Example |
|---|---|
| Face value bought | ₦100,000,000 |
| Coupon | 19% a year, paid semi-annually |
| Each coupon payment | ₦100,000,000 × 19% ÷ 2 = ₦9,500,000 |
| Payments per year | 2 |
| At maturity | Last coupon plus ₦100,000,000 face value |
If market yields on similar bonds fall to 16%, buyers will pay more than face value for a 19% coupon. If they rise to 22%, the price falls below face value. A holder who keeps the bond to maturity still receives every coupon and the full face value, so price changes only matter if you sell early.
Yield to maturity
The yield quoted in the market is the yield to maturity: the single annual rate that makes the present value of all remaining coupons and the face value equal to today's price. It is the return you earn if you buy at today's price, receive every payment on time and hold to maturity. It assumes coupons are reinvested at the same yield, which rarely happens exactly, so treat it as a comparison measure rather than a promise.
Clean price and accrued interest
Bonds are quoted at a clean price, excluding interest built up since the last coupon. When you buy between coupon dates, you also pay the seller the accrued interest, and you then receive the full next coupon. The total paid is the dirty price.
Risks to understand
- Interest rate risk: the market price falls when yields rise, which matters if you sell before maturity.
- Inflation risk: a fixed coupon can be worth less in real terms if inflation rises above it.
- Liquidity risk: some bonds trade rarely, so selling quickly may mean accepting a lower price.
- Reinvestment risk: coupons received may have to be reinvested at lower rates.
- Credit risk: FGN bonds are backed by the Federal Government and are treated as the lowest-risk naira asset, but they are not risk-free in every sense.
How individuals buy FGN bonds
- Secondary market. Through a bank, stockbroker or dealer that trades on FMDQ or NGX; many offer smaller minimums than the auction.
- Bond funds. Through SEC-registered fixed-income mutual funds that hold FGN bonds.
- FGN Savings Bond. A retail product from ₦5,000; see how FGN Savings Bonds work.
- Pension savings. Pension funds hold a large share of FGN bonds on behalf of RSA holders; see how the RSA pension system works.
Other federal government securities
| Instrument | Notes |
|---|---|
| Nigerian Treasury Bills | Short-term discount bills of up to 364 days; see how T-bill auctions work |
| FGN Savings Bond | Retail bond of two or three years, offered monthly |
| FGN Sukuk | Non-interest securities issued by the DMO through a special purpose vehicle to fund road projects |
| FGN Green Bond | Bonds whose proceeds fund certified green projects |
| Eurobonds | US dollar bonds sold to international investors |
Questions people ask
What is the minimum to buy FGN bonds at auction?
₦50,001,000, then multiples of ₦1,000, through a Primary Dealer Market Maker. Smaller amounts can be bought in the secondary market.
How often do FGN bonds pay interest?
Every six months, at the fixed coupon rate set when the bond was first issued.
Can I sell an FGN bond before maturity?
Yes, in the secondary market through a bank or broker, at the market price on the day, which may be above or below what you paid.
Who issues FGN bonds?
The Debt Management Office, on behalf of the Federal Government of Nigeria.
Sources
- Debt Management Office Nigeria (DMO): FGN bonds and FGN Savings Bonds · accessed Oct 2026
- FMDQ Securities Exchange · accessed Oct 2026
- Nigerian Exchange Group (NGX) · accessed Oct 2026
- Securities and Exchange Commission Nigeria (SEC) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.