The Federal Government’s borrowing costs declined across all three instruments offered at Monday’s bond auction, as investors accepted lower yields while the Debt Management Office (DMO) allotted N805.16 billion worth of Federal Government of Nigeria (FGN) bonds.
The DMO reopened the 22.60 per cent January 2035, 16.25 per cent April 2037 and 15.45 per cent June 2038 FGN bonds, offering a combined N1.10 trillion to investors amid strong demand.
The stop rate on the January 2035 bond fell by 119 basis points to 17.15 per cent from 18.34 per cent at the previous auction. Similarly, the April 2037 bond recorded a 116-basis-point decline, with its stop rate dropping from 18.35 per cent to 17.19 per cent.
The June 2038 bond also recorded a lower stop rate, falling by 61 basis points from 18.40 per cent to 17.79 per cent.
Despite the lower borrowing costs, investor demand remained robust, with total bids reaching N1.73 trillion, representing a bid-to-offer ratio of 1.6 times. The DMO allotted N805.16 billion, translating to a bid-to-cover ratio of 2.2 times.
The January 2035 bond attracted N513.61 billion in bids against the N250 billion on offer, although only N64.13 billion was allotted.
For the April 2037 bond, investors submitted N392.48 billion in bids against an offer of N100 billion, with N110 billion eventually allotted.
The June 2038 bond attracted the strongest demand, receiving N821.32 billion in bids against the N750 billion offered. The DMO allotted N631.02 billion of the instrument.
The auction results point to sustained investor appetite for longer-dated government securities, even as the Federal Government secured funding at lower stop rates across all three maturities.
