The Director General of the DMO, Dr. Abraham Nwankwo, dismissed JP Morgan’s proposed phasing out of FGN Bonds in its Government Bond Index – Emerging Markets (GBI –EM) and assured investors that “the bonds remain the very safe and liquid securities they have always been”.
Nwankwo told journalists in Abuja that another set of long tenor bond auction to raise more funds from the debt market would be issued on Friday.
He urged foreign investors to continue with their longstanding interest in the market being fully aware that the Bonds remain the very safe and liquid securities they have always been.
He disclosed that it was JP Morgan that applied to list FGN Bond on its index in 2012, nine years after the Nigerian government had developed its FGN Bond market all by itself with a crop wholly indigenous technocrats.
Nwankwo noted that the planned phasing out of the FGN Bond from the JP Morgan Index does not have any impact on the quality of the FGN Bonds.
According to him, FGN Bonds remain risk-free securities that are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.
He explained that JP Morgan’s action does not imply that the Bonds are no longer liquid because FGN Bonds are supported by an active Secondary Market which allows investors to buy or sell them on any business day through any of the 13 Primary Dealer Market Makers licensed by the DMO or on the Nigerian Stock Exchange where the Bonds are listed and for which purpose there is a Government Stockbroker (Stabic IBTC).
JP Morgan had last week informed Nigeria that it would be delisted from its index by year end, following what it described as liquidity challenges in the foreign exchange market which can enable foreign investors quickly repatriate their investment in crisis situation.
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