FGN bond auction draws N1.41T bids, exceeds N1.2T offer as yields rise to 18.35%
FG's June bond auction attracted N1.41 trillion in investor subscriptions—N213.49 billion over the N1.2 trillion offered for its reopened 2035 and 2037 bonds. The Debt Management Office allotted N1.222 trillion, comprising N600.90 billion for the 22.60% FGN January 2035 bond and N621.00 billion for the 16.2499% FGN April 2037 bond.
Despite doubling the offer from May's N600 billion, investors submitted bids worth N705.22 billion for the 2035 instrument and N708.27 billion for the 2037 bond, driving total subscriptions to N1.41 trillion (up from N516.17 billion in May). The auction cleared at marginal rates of 18.34% for the 2035 bond and 18.35% for the 2037 bond—up 134 and 131 basis points from May—while original coupon rates remain unchanged at 22.60% and 16.25%.
This sustained demand for long-term government securities, even as borrowing costs rise, provides the FG with reliable funding amid elevated financing needs. With inflation concerns persisting in domestic fixed income markets, will you consider FGN bonds for their 18.35% effective yield, or seek other inflation-protected instruments?