20 September 2015, Abuja – The Debt Management Office has insisted that Federal Government of Nigeria Bonds remains safe and liquid despite the planned phasing out of the debt instrument by JPMorgan.
While speaking recently, the Director-General, DMO, Dr. Abraham Nwankwo, assured investors of the safety and liquidity of their investment in the FGN Bonds.
According to him, the DMO will demonstrate the viability of the instrument on Friday at its scheduled issuance of FGN Bonds.
Nwankwo said JPMorgan’s proposed phasing out of the FGN Bonds from its Government Bond Index – Emerging Markets did not amount to a downgrade of Nigeria or the FGN Bonds since JPMorgan was not a credit rating agency.
The DMO boss said it was JPMorgan that applied to list FGN Bonds on its index in 2012. This, he added, was nine years after the government had developed its market all alone.
Claiming that the planned phasing out of the securities would not impact on the quality of the FGN Bonds, Nwankwo said the bonds remained risk-free securities that were backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria.
“The 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, Stanbic IBTC,” he said. “While the index is a strong tool for attracting foreign investors to invest in a domestic market for which Nigeria derived some benefits, investors who have confidence in the potential of Nigeria and the reforms targeted at their realisation will still see Nigeria as an attractive investment destination.”
Nwankwo said that without the JPMorgan Index, the agency would continue to introduce measures to attract more domestic investors to the bond market, particularly non-banking institutions and retail investors, in order to enlarge and diversify the investor base.
He said the debt instrument continued to enjoy high subscription levels at the FGN Bond auctions and sustained activities in the secondary market in spite of external developments such as the end of the Quantitative Easing programme of the US Federal Reserve Bank in October 2014 and the placement of Nigeria on the negative watch list by JPMorgan in January 2015.