Nigeria returns to J.P. Morgan bond index after 11 years

Nigeria has returned to a J.P. Morgan emerging-market bond benchmark for the first time since 2015 after selected Federal Government bonds were added to the bank’s new Government Bond Index-Emerging Markets Edge.

The Federal Ministry of Finance said the inclusion followed reforms that improved foreign-exchange liquidity, helped stabilise the naira and strengthened trading conditions in the domestic bond market.

Punch and Daily Post reported that Nigeria was assigned a 7.40 per cent weighting in the new index, close to J.P. Morgan’s eight per cent country cap. The ministry said the selected bonds met liquidity and issuance-size requirements, including outstanding volumes above the $250 million minimum for the index.

Premium Times reported Finance Minister Taiwo Oyedele as saying the return could attract about $17.5 billion into Nigeria’s debt market and lower bond yields by up to 200 basis points. The development comes more than a decade after Nigeria was removed from J.P. Morgan’s main emerging-market local-currency bond index over foreign-exchange liquidity constraints.

The ministry said the listing could bring fresh foreign demand for FGN bonds as index-tracking investors adjust their portfolios. It also said more work is still needed before Nigeria can return to J.P. Morgan’s flagship index.

Sources: Punch, Daily Post, Premium Times