Yield on FGN Bonds Climbs 77bps as Investors Trim Holdings
Trading activity in Federal Government of Nigeria (FGN) bonds was bearish, as investors trimmed holdings across the curve in the secondary market amid repricing at the Debt Management Office (DMO) auction for the month.
The sell pressure, reflecting weak investor demand, drove yields higher by 77 basis points in the secondary market. Traders reported that selloffs across most maturities weighed on performance compared to the previous week.
Trading activity was relatively subdued ahead of the main auction, reflecting cautious investor sentiment and limited appetite for local fixed-income securities. The benchmark yield on FGN bonds rose by 77 basis points, closing at 17.78% on Friday, according to Cowry Asset Management Limited.
Activity at the short end of the curve (0–5 years) saw yields rising by 67bp to 17.33%, while the mid-segment (6– 12 years) witnessed strong selloffs and the long end (>12 years) recorded repricing, with yields expanding by 120bps to 17.30% and 44bps to 15.14%, respectively.
The Debt Management Office (DMO) conducted its June 2026 FGN bond auction on 22 June 2026, offering a total of N1.2 trillion, up from N600 billion at the previous auction through the re-opening of the 22.60% FGN FEB 2035 and the 16.25% FGN APR 2037 instruments.
Investor participation strengthened, with total subscriptions settling at N1.41 trillion, higher than the N796.17bn subscription at the previous auction. This translates to a bid-to-offer ratio of 1.18x.
The DMO allotted the full ₦1.2 trillion, translating to a bid-to-cover ratio of 1.16x.
Demand was broadly balanced across both tenors, while stop rates rose sharply to 18.34% for the Jan 2035 bond and 18.35% for the Apr 2037 bond, up from 17.00% and 17.04%, respectively, at the previous auction, reflecting investors’ demand for higher yields amid rising inflation.
This is the sharpest single-month repricing on the 2035 line in 2026 to date, reversing the disinflation-driven rate compression seen between January (17.52%) and April (16.59%). Three forces appear to explain the swing. CBN Allots N2.1trn in OMO Bills to Banks, Foreign Investors
