05 October 2013, Kaduna – The Debt Management Office, DMO, on Friday said that its domestic debt market initiative had helped to increase inflow of foreign exchange.
It said that this had also contributed to the growth of external reserves and stability of the Naira exchange rate.
Dr Abraham Nwankwo, the Director General of DMO, disclosed this at a retreat for some members of Finance Correspondents Association of Nigeria, FICAN, on Friday in Kaduna.
“As at the end of December 2012, foreign investors hold in the Federal Government of Nigeria, FGN, securities amounted to 5.112 billion dollars compared to about 500 million dollars as at end of January 2012.”
Abraham said that other benefits included increase in the relative share of foreign investors’ holdings in FGN securities, adding that foreign investors accounted for zero per cent in the first quarter of 2012.
According to him, the foreign investors’ shares have increased to 19.52 per cent as at the end of 2012.
He said that the initiative had significantly reduced government’s cost of borrowing and further diversification of investor-base of FGN securities.
On the external debt market initiative, he said that the establishment of Nigerian sovereign bonds in the international market had provided foreign investors with requisite market information for investment decisions.
He said that the DMO had created windows of opportunities for private sector to raise long-term capital for the development of the real sector and infrastructure.
Nwankwo said that some private sector firms had explored and exploited these opportunities both in the domestic bond market and in the International Capital Market, ICM.
“Twenty Nigerian corporates have raised long-term capital of over N200 billion from the domestic debt market between 2005 and 2012 to fund the development of the real sector.
“In response to the creation of a sovereign benchmark in the ICM, four Nigerian corporates have taken due advantage to issue Eurobonds between January 2011 and July 2013, amounting to 1.45 billion dollars.’’
He named the organisations to include the Guaranty Trust Bank, Access Bank, Fidelity Bank and First Bank.
Nwankwo said that the ICM, in March 2013, issued a naira dominated debt instrument worth 76 million dollars in the domestic debt market.
This, he said, had established a benchmark for other international bond issuers to tap the growing naira bond market.
Nwankwo assured that the DMO would continue to encourage more Nigerian organisations to leverage on the existing sovereign benchmarks to raise long-term capital in the domestic market and ICM.
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