What the report shows

The June auction shows sustained investor interest in Federal Government securities, with both instruments attracting subscriptions above the amounts offered.

• The 2035 bond recorded an oversubscription of N105.22 billion, while the 2037 bond was oversubscribed by N108.27 billion.
• Investor participation also strengthened significantly during the month. Total bids rose to 394 from 265 in May, while successful bids increased to 316 from 175.
• Notably, the longer-dated 2037 bond attracted stronger demand, accounting for just over half of total subscriptions and receiving the highest allocation of N621 billion.

The strong demand came despite the larger offer size. The DMO doubled its issuance target from N600 billion in May to N1.2 trillion in June, yet investors submitted sufficient bids to fully absorb the offer and support additional allotments.

Yields climb as borrowing costs rise

While demand remained robust, the June auction reflected a higher return requirement from investors.

• The marginal rate on the 2035 bond increased from 17.00% in May to 18.34% in June, representing a rise of 134 basis points.
• Similarly, the stop rate on the 2037 bond climbed from 17.04% to 18.35%, an increase of 131 basis points.
• The range of bids submitted by investors also widened. For the 2035 bond, bids ranged from 16.00% to 22.60%, while bids for the 2037 instrument ranged from 16.00% to 21.75%.

The rise in marginal rates indicates investors demanded higher yields to hold long-term government debt, effectively raising the government's borrowing cost compared with the previous month.

What you should know

Nairametrics observed that total market subscriptions jumped from N516.17 billion in May to N1.413 trillion in June, representing a month-on-month increase of N897.32 billion or 173.8%.

• Likewise, total allotments rose from N614.51 billion in May to N1.222 trillion in June, an increase of N607.39 billion or 98.8%.
• The amount offered also doubled from N600 billion in May to N1.2 trillion in June, reflecting the Federal Government's increased domestic borrowing requirement.
• In May, investors subscribed N262.23 billion to the 2035 bond and N253.94 billion to the 2037 bond, while the latter also received a N280 billion non-competitive bid. By contrast, June's auction generated more than N700 billion in demand for each instrument.

The latest result suggests that domestic investors continue to view FGN bonds as attractive investment vehicles, even as yields move higher, providing the government with a reliable source of long-term funding amid elevated financing needs.

Nairametrics earlier reported that data compiled from the Financial Markets Dealers Association (FMDA) weekly research showed that yields across both markets also moved higher, reflecting bearish sentiment and persistent inflation concerns that continue to shape domestic fixed income pricing.

The data points to an active repricing cycle in Nigeria's fixed income market, with investors increasing trading activity while demanding higher returns, pushing yields higher across most maturities despite declining yields in major global bond markets.