A CRUMBLING country: JP Morgan completely removes Nigeria’s bonds from index

A CRUMBLING country: JP Morgan completely removes Nigeria’s bonds from index

General Muhammadu Buhari's 7 months of CONFUSED reign has completely ruined Nigeria!

Bonds closed on Friday with yields on benchmark instruments closing flat, despite the final phase-out of Nigerian bonds from the JP Morgan index on Friday.

This is just as the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, in response to calls for devaluation of the naira by former CBN governor, Sanusi Lamido, ruled out further devaluation of the local currency.

Mr Emefiele told journalists that the last devaluation took place in February and would remain so for now.

Meanwhile, JP Morgan Chase and Co. delisted part of Nigeria bonds from its Government Bond Index for Emerging Markets (GBI-EM) in the middle of September for alleged lack of liquidity for transactions and transparency in the determination of exchange rate. It had earlier announced that it will fully remove Nigeria from its Index by the end of October.

Nigeria became the second African country after South Africa to be listed in JP Morgan’s emerging government bond index in October 2012, after the Central Bank removed a requirement that foreign investors hold government bonds for a minimum of one year before exiting.

Hence, investors said the average yield on benchmark bonds declined 22basis points (W-o-W) to 13.4 per cent.

“We do not anticipate any major distortions in the pricing of bonds post-implementation of the JP Morgan phase out as most of the effects have already been priced in, whilst demand for government instruments will continued to be supported by domestic money managers,” one dealer said.

In the interim, market participants said there are ebbing investors’ confidence in the equities market due to weak earnings results, corporate governance and regulatory compliance concerns, interest of domestic investors in fixed income securities

Liquidity inflows to the financial system on Thursday from maturing open market operation (OMO) bills buoyed activity in bonds market with total value of bonds traded put at N88.1billion whist yields declined 8bps to 13.5 per cent on average across benchmark bonds.

According to Emefiele, “There has been a lot of talk on whether or not we want to depreciate our currency again.

“The truth is that we had adjusted the currency by depreciating it from N155 to N197 in February this year.

“There is no intention to depreciate or adjust the currency any longer,” he said.

There had been calls for the devaluation of naira in the face of economic crunch.

The International Monetary Fund and Sanusi, recently called for the depreciation of the currency.

According to Mr Emefiele, “the president has been very clear on this; the Vice President has been very clear on this and let me further reiterate our position at the CBN that we are not considering any further depreciation of the currency.”

He said the focus of the bank was how to deepen the foreign exchange market to make it viable.

“What we are trying to concentrate on right now is how to improve and deepen the foreign exchange market by improving supply of foreign exchange into the market.

“And to do so, we are trying to encourage people to export and earn your export proceeds and use your export proceeds to import whatever you need to import.”

“We are also concentrating on how to reduce the import of items that we can produce in the country today,” he said.

Mr Emefiele said soon the CBN would be launching a campaign called PAVE, which means “Produce locally, Add Value and Export your product and earn your foreign exchange for your imports.”

He said the campaign was the only way producers could support the efforts of CBN in intervening and providing foreign exchange in the market to meet the import needs of the people.

-Nigerian Tribune