Leadership (Abuja)
Justus Nduwugwe
9 November 2009
Abuja — The Minister of Finance, Dr.Mansur Muhtar, yesterday said that to date, a total amount of N2.5trillion FGN bonds have been issued and have attracted very high subscription totaling over N4.4trillion.
Represented by the Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo at a seminar on reviving Nigeria 's non-government bond market in Abuja, the minister said that the financial market now has a benchmark against which to price bonds of different tenors, issued by different borrowers, corporate and other non-government agents.
According to him, "In addition to providing the much desired stable funds for government, other commendable milestones achieved include the establishment of the Primary Dealer Market Maker (PDMM) system for liquid and efficient secondary market, the extension of the Sovereign Yield Curve from short term Nigerian Treasury Bills (91-360 days) to long tenured bonds of 3,5,7,10 and 20 years".
The minister recalled that when the FGN bond market was resuscitated in 2003, one of the major objectives was to lay the foundation and establish the benchmarks that would facilitate the revival of corporate and other non-sovereign bonds. "Six years on, it is evident that the initiatives led by Debt Management Office and supported by SEC, CBN, the NSE, private capital market operators and international partners, prominently the IFC and the World Bank, have achieved that objective to a reasonable extent", he argued.
He continued, "Regular monthly primary market auctions and active secondary market trading of the sovereign instruments, ranging from three years to 20 years, had become a prominent feature of the Nigerian financial system". With such a background, he said, it is time to revive the non-government bond market so that it can build on the foundation provided by the FGN bond market.
Noting that a special challenge embedded in the revival of the non-government bond market is the risk of crowding out effect or tight competition for limited pool of investible funds by various suppliers of debt instruments, he advised stakeholders to lay emphasis on the development of the investors' base, locally and externally.
In a keynote address by the acting Director General of the Securities and Exchange Commission (SEC), Ms. Daisy Ekineh, said corporate bonds are important not just as financing instrument for corporate development and investment instruments for investors, they are important in diversifying the capital structure of companies.
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