PFAs invest N9tr in FGN securities, up 6% YoY
By Jeph Ajobaju, Chief Copy Editor
Pension Fund Administrators (PFAs) increased their investment in government securities 6.2 per cent from N8.475 trillion in half year 2021 (H1 2021) from N9.008 trillion in H1 2022. Their portfolio at end 2022 may double that of end 2021.
PFAs target FG Bonds, Treasury Bills, Agency Bonds, and Green Bonds, among other securities; and more of their funds may pour into these products in H2 2022 with the Central Bank of Nigeria (CBN) raising Monetary Policy Rate (MPR).
The MPR was raised from 11.5 per cent to 14 per cent between May and July.
National Pension Commission (PenCom) data shows Green Bonds clinched the highest growth, rising 428 per cent to N68.095 billion in H1 2022 from N12.882 billion in H1 2021.
Sukuk Bonds came next, up 58.6 per cent to N136.606 billion from N86.096 billion, followed by FGN Bonds which grew 6.4 per cent to N8.313 trillion in H1 2022 from N7.814 trillion in H1 2021.
Agency Bonds went up 1.7 per cent to N13.825 billion from N13.6 billion.
However, Treasury Bills investment declined 13.2 per cent to N475.636 billion in H1 2022 from N548.132 billion in H1 2021.
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Analysts weigh in
Two analysts interviewed by The PUNCH expressed optimism that PFAs will investment more on government securities.
Victor Chiazor (Fidelity Securities Investment and Research Head)
“The rise in PFAs’ investments in government securities is triggered by the investment friendly rate environment during this period.
“More of this investment is expected to be increased in the second half of the year as we get closer to the 2023 general election.”
Garba Kurfi (APT Securities and Funds Managing Director/CEO)
“Investment in FGN Bonds by PFAs is necessary because of its low risk, higher yield and availability when compared with the other investments. More than N9.0 trillion in the Nigerian financial market were invested into bonds.
“There is need for more financial products that are less risky and can give alternative higher yield to bonds in the financial market in order to attract pension funds investment.”