By Kelechi Mgboji
Assistant Business Editor
Bond yields remain relatively stable despite JP Morgan’s phase-out of Nigerian bonds from its Emerging Markets Government Bond Index (GBI-EM).
Buoyed by liquidity inflows to the financial system from maturing open market operation (OMO) bills, activity in the bonds market remain robust with total value of bonds traded at N88.1 billion while yields have declined 8bps to 13.5 per cent on average across benchmark bonds traded.
Against this background, the Debt Management Office (DMO) on Wednesday, November 11 raised N50 billion worth of local currency denominated bonds maturing in February 2020 and March 2024.
The DMO issued N30 billion worth in the 2020 paper and N20 billion worth in the 2024 debt, using the Dutch Auction System (DAS).
All the debt is a reopening of previously issued paper.
A dealer told TheNiche that “there has been no major distortions in the pricing of bonds post-implementation of the JP Morgan phase out as most of the effects have already been priced in.
“Demand for government instruments will continue to be supported by domestic money mangers.”
The dealer, who did not want his name in print, said equity investors fleeing the capital market – over concern for weak earnings results, corporate governance, and regulatory compliance – find fixed income instruments more stable in returns on investment.
They have joined domestic investors to boost activities in fixed income securities.
JP Morgan completed the final phase-out of Nigerian bonds from its index on October 30.
It had in September announced that it would remove Nigeria from its Government Bond Index (GBI-EM) by the end of October.
Nigeria became the second African country after South Africa to be listed in JP Morgan’s emerging government bond index in October 2012, after the Central Bank removed a requirement that foreign investors hold government bonds for a minimum one year before exiting.