J.P. Morgan Puts Nigerian Bonds Back in Global Investors Spotlight

(J.P. Morgan. Photo by DMO Nigeria)

J.P. Morgan, a major global investment bank, has added Nigeria to a new list of emerging market bonds it tracks called the Government Bond Index-Emerging Markets Edge.

Nigerian government bonds have been given a 7.4 per cent weighting in this benchmark.

The inclusion is significant because it gives naira-denominated Nigerian bonds renewed attention from international investors who follow J.P. Morgan's indices.

Nigeria's allocation is close to the 8 per cent maximum weight assigned to individual countries in the index.

The benchmark tracks about 17.47 billion dollars worth of eligible Nigerian government bonds spread across 16 different securities.

These bonds have an average return to maturity of 17.1 per cent, an average duration of 3.38 years and carry a B- credit rating.

Nigeria's weighting ranks among the larger allocations in the index.

Countries like Vietnam, Egypt, Morocco, Pakistan, Bangladesh and Kazakhstan each have the maximum 8 per cent weight, while Sri Lanka has 7.5 per cent and Kenya has 6.91 per cent.

Overall, the GBI-EM Edge tracks about 328 billion dollars in local-currency government debt across 425 securities, 26 markets and 24 currencies.

Frontier African markets make up 44.5 per cent of the index compared with 31.5 per cent for Asian markets.

This is particularly important for Nigeria because the country's bonds are returning to J.P. Morgan's index universe after more than a decade.

Nigeria was removed from J.P. Morgan's main government bond index years ago but was initially admitted in October 2012 when the domestic bond market became more active.