The FMDQ Exchange reported that the outstanding value of corporate bonds reached N2.30 trillion in June 2026. This figure represents a slight increase from N2.29 trillion recorded in May, solidifying corporate bonds' status as the largest segment of admitted non-sovereign securities on the Exchange.

According to FMDQ Exchange’s latest fixed income market report, corporate bonds continue to anchor Nigeria’s debt capital market despite a sharp slowdown in new issuance activity during June.

Corporate Bond Market Dominance

Corporate bonds have consistently dominated the FMDQ market, with values climbing steadily over recent months. They surged from N1.81 trillion in March 2026 to a peak of N2.34 trillion in April, driven by a wave of new issuances.

Values have remained broadly around this range, easing slightly to N2.30 trillion by June. New corporate bond listings in June amounted to N15.00 billion, a rebound from zero issuance in May but significantly lower than April 2026’s robust N531.89 billion.

Other notable issuance months included January 2026 with N63.03 billion, while corporate bond issuance was inactive in February 2026. The lowest outstanding corporate bond value in the six-month period ending June 30, 2026, was N1.78 trillion, recorded in February 2026.

Commercial Paper Segment Recovery

The Commercial Paper (CP) segment showed signs of recovery after a steady decline that began in November 2025 (N877.41 billion) and worsened in April 2026 (N319.51 billion). Outstanding CP value rose to N465.34 billion in June, an increase of N16.46 billion from N448.88 billion in May.

Outstanding CP value had peaked at N1.54 trillion in July 2025 before its decline through to April 2026. However, new CP listings fell sharply to N36.79 billion in June, a decrease of N152.36 billion from May’s N189.15 billion, marking one of the weakest issuance months on record. The weakest CP issuance month was April 2026 at N10.00 billion.

The average tenor for quoted CPs lengthened to 290 days in June from 277 days in May, indicating a continued preference for medium-to-longer maturities among issuers and investors. Tenors had peaked at 364 days in April 2026.

Subnational Bonds and Easing Financing Costs

Subnational bonds remained an outlier, with their outstanding value unchanged at N661.06 billion since February 2026. This segment was previously boosted by Lagos State’s N244.82 billion dual bond issuance, which lifted it from N416.25 billion. No new subnational bond issuance has been recorded since February.

Financing costs for issuers continued their gradual decline in June. The average discount rate for quoted CPs fell to 19.18%, down from 19.78% in May, a 0.60 percentage point decline. This extends a broader easing trend from a high of 22.49% in June 2025.

Specifically, the 91–180 day CP segment eased to 19.44% in June from 20.11% in May. The 181–364 day CP segment declined to 19.11% from 19.69% over the same period. Local Currency Corporate Bonds with 5–10 year tenors carried an average rate of 18.00% in June, which is below prevailing CP rates, reflecting the typically lower cost of longer-dated, better-rated instruments.

Discount rates had briefly ticked up to 20.65% in April 2026 before resuming their downward trend through May and June. The period low for discount rates was 18.81%, recorded in February 2026.

On sectoral allocation for quoted CP activity in June, Telecommunications accounted for 60.00%, while Financial Services and Health & Pharma each contributed 20.00%.

Corporate bonds, with an outstanding value of N2.30 trillion, are nearly five times the size of the CP market, underscoring their role as the primary vehicle for long-term corporate financing on FMDQ Exchange. Nigeria’s debt capital market has remained resilient in 2026 despite elevated interest rates, with FMDQ Exchange reporting record turnover of N249.18 trillion between January and April.

Corporate bond issuance also accelerated in H1, led by landmark deals from NBET Finance, Access Bank, Lagos State, and UAC of Nigeria, reflecting sustained appetite for long-term funding despite higher borrowing costs. The easing commercial paper discount rates suggest funding conditions are gradually improving, even as issuers continue to pay historically high coupons to access capital.

The combination of slower new issuances across both CPs and corporate bonds in June, alongside declining discount rates, suggests improving financing conditions. This could also reflect seasonal financing patterns or reduced short-term funding needs among corporates. The steady recovery in outstanding CP value, despite weak new listings, points to underlying investor demand for short-term paper remaining intact, suggesting a potential pickup in fresh CP issuance in the coming months.