VENTURES AFRICA – Leading global financial service provider, JP Morgan has said on Wednesday it was considering listing Nigeria in its Government Bond Index – Emerging Markets (GBI-EM) from October, after it met the necessary requirements.
JP Morgan’s requirements for its GBI-EM qualification includes classification as a low/upper-middle income country by the World Bank for at least two consecutive years, availability of two-way daily pricing on bonds, sufficient liquid local bond market and among others.
International news agency, Reuters reports that JP Morgan having “around $170 billion of assets under management benchmarked against the index and given that Nigeria is expected to have a weight of 0.59 percent in the index by December 3, there could be over $1 billion flowing into its local bond market in the coming months, said Giulia Pellegrini, JP Morgan economist and strategist for Sub-Saharan Africa.”
She added that the eventual inclusion “raises the visibility of the Nigerian bond market on the international scene, placing what has been so far deemed a “frontier” market a step closer to more mainstream investment destinations.”
Commenting on the development, CitiBank sub-Saharan Africa strategist, Leon Myburgh said: “It has removed a barrier to easy entry and exit of foreign investors in the local bond market. This has spurred renewed interest by foreigners, helping raise market liquidity in and enhance the profile of the local bond market on an international level.”
Though more Nigerian bonds could be included in the GBI-EM in the future, three Nigerian bonds, maturing in 2014, 2019 and 2022, are qualified for the index, tentatively.