Published On: Wed, Sep 16th, 2015

FGN’s bonds strong in spite of JPMorgan’s delisting of Nigeria – DMO

The Debt Management Office (DMO) said that the quality of Nigerian bonds was not affected by the removal of Nigeria from the JPMorgan Bond Index for emerging markets.

The Director-General of DMO, Mr Abraham Nwankwo, made the statement on Wednesday in Abuja at a news conference.

He said that the Federal Government’s bonds were strong and robust.

JPMorgan Chase and Co. delisted Nigeria from its Government Bond Index for Emerging Markets (GBI-EM) for alleged lack of liquidity for transactions and transparency in the determination of exchange rate.

JPMorgan added Nigeria to its index in 2012 and on January 16, it placed Nigeria on a negative index watch and finally delisted Nigeria on September 8.

JPMorgan is the largest financial services holding company in the United States and the world’s fifth largest bank with total assets of $2.6 trillion.

According to Nwankwo, Nigeria’s removal from the index “does not amount to a downgrade of Nigeria or FGN Bonds since JPMorgan is not a credit rating agency.

“It does not have any impact on the quality of the FGN Bonds.

“They remain risk-free securities that are backed by the full faith and credit of the Federal Government and are charged upon the general assets of Nigeria.

“It does not imply that the bonds are no longer liquid.’’

Nwankwo also said that FGN bonds were supported by an active secondary market which allowed investors to buy or sell them on any business day.

He said this could be done through any of the 13 primary dealer market makers licensed by the DMO or on the Nigerian Stock Exchange (NSE) where the bonds were listed and for which purpose there was a government stockbroker.

He said that although the Index was a strong tool for attracting foreign investors to invest in the Nigerian bonds market, it did not mean they would be prevented from doing so.

“It does not imply that foreign investors cannot or will not be allowed to invest in FGN bonds or the Nigerian financial markets as a whole.’’

He said that the bonds market was resuscitated by the DMO in 2003 and was successful, leading to JPMorgan listing it on its Index in 2012.

He said the Index listing was in recognition that Nigeria was one of the few emerging market countries with a robust domestic market.

The director-general said that investors who had confidence in the potentials of Nigeria and the reforms at their realisation should still see Nigeria as an attractive investment destination.

He, however, said that the government had taken steps to ensure that the economy was stabilised.

“We want to say that the Nigerian economy has proved to be resilient.

“The government has taken initiatives to ensure short term stabilisation in terms of the physical position of the various governments in the country and efforts are being made to deal with the long term effects.

“The efforts are being made to make sure that this market in the next three to five years becomes one of the strongest, one of the most sought after, not only in Africa but in the whole world and we will continue in that pursuit.’’

He, however, appealed to the media and all other Nigerians to avoid negative publicity of the Nigerian economy.

“We should not join the bandwagon of speculations and negative sentiment building around the bonds market and the economy.

“They should rather emphasis that the Nigerian bond market existed before it was listed on the JPMorgan Index,’’ he said. (NAN)
 

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