Nigeria in talks with JP Morgan to re-enter bond index

Patience Oniha, the director-general of the Debt Management Office (DMO), says Nigeria is in talks with J.P. Morgan to be admitted back into its government bond index for emerging markets.

Oniha spoke tersely on Tuesday during the Nigerian Investor Forum, held on the sidelines of the International Monetary Fund (IMF) and World Bank spring meetings in Washington DC, the United States.

“Regarding the JP Morgan Index, investors want us back in,” the director-general said.

“With the reforms implemented, the foreign exchange market has improved, and we’re eligible again. We’ve resumed active engagement with JP Morgan to re-enter the index.”

In 2015, J.P. Morgan delisted Nigeria from its government bond index for emerging markets (GBI-EM) due to allegations of a lack of liquidity for transactions and transparency in the determination of the exchange rate.

The financial services firm added Nigeria to its index in 2012 and subsequently placed the West African nation on a negative index watch, and finally delisted Nigeria on September 8, 2015.

The organisation, in 2022, also removed Nigeria from the list of emerging market sovereign recommendations that investors should be ‘overweight’ in.

The development reportedly followed the country’s inability to capitalise on high oil prices.

J.P. Morgan is the largest financial services holding company in the United States and one of the most influential financial institutions in the world.

The bank’s GBI-EM is used by global investors to track emerging markets debt.

‘NIGERIA NOW HAS A COMPETITIVE CURRENCY’

Speaking on reforms in Nigeria’s foreign exchange (FX) market, Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the important thing for the diaspora and investors outside is that Nigeria now has a competitive naira.

“I think that is key. That’s a game changer because this hasn’t happened since a few years after independence,” Cardoso said.

“So I think that has been a great transformation which has brought a paradigm shift in the way FDIs look at the financial market.

“I talked to a number of these investors that come from the FDI side. They want reassurances on a number of things.

“They look and they have been consistently looking at the way the market has moved, and they are comfortable that a competitive currency is available that makes business more attractive for them.”

Cardoso said the CBN will strengthen its processes to make sure “we don’t end up disappointing the market that has put some confidence in the things we are doing and believes that we only need to continue strengthening”.

The CBN boss said the small percentage of intervention from the central bank in the FX market “is a good thing” because it gave confidence to the market at the time it happened.

“And quite frankly, some things happened around that time. For example, we changed to the B matching system, which made it open and transparent to everybody, so you couldn’t hide any longer,” he said.

“If you are selling a certain amount of foreign exchange, it must be on the screen. Everybody knew who was buying and who was selling.”

This, he said, was followed up with the code of ethics, which is said to have reinforced the concept of transparency.

Cardoso said with the initiative, market players now understand that it is a market that should be protected by everyone, stressing that those with bad behaviour should not be allowed into that market.