Yields on Nigeria’s 2024 bond shed 15 basis points to 11.89 per cent on Friday, after JP Morgan added it to its Government Bond Index-Emerging Market (GBI-EM).
This, according to dealers attracted offshore funds. The 10-year benchmark bond opened for trade at 12.04 per cent, Reuters said. Also, Afrinvest Securities Limited anticipates that the inclusion would deepen foreign participation in the FGN bond market and also improve the overall liquidity of the FGN bond market.
“We anticipate a marginal drop in the average yield in the bond market on the back of improved confidence in the Nigerian bond market as JP Morgan includes the Nigerian bond in its Emerging Market bond index,” the Lagos-based research and investment firm stated in a report.
JP Morgan last week disclosed plans to add Nigeria’s 2024 bond to its emerging market government bond index, in addition to five other bonds already listed on the index.
Since then, some investors have taken profits, dealers said. The addition also lifted overall trading volumes on Friday to around N11.5 billion, compared to an average of between N8 billion and N9 billion.
JP Morgan valued Nigeria’s outstanding bond issues on its index at $13.75 billion. Barclays had added some of Nigeria’s bonds to its index last year.
“JPMorgan will want to add more Nigerian bonds in the future as old ones on their portfolio drop in tenor and there is need to review and add longer-tenor bonds that will reflect true pricing,” a fixed-income securities and currency analyst at Ecobank Transnational Incorporated (ETI), Kunle Ezun had said.
He added: “The addition will give the Nigerian bond market a global outlook, increase investor demand and drop yields.” To the executive director in charge of market development at the Debt Management Office, Patience Oniha, the inclusion reaffirms the strength of the Nigerian bond market