FG To Reissue 10-Yr Bond After JP Morgan Expulsion

FG To Reissue 10-Yr Bond After JP Morgan Expulsion
Nigerian Stock Exchange

The Federal Government plans to re-issue its five- and 10-year bonds in the last quarter of the year to raise up to N270 billion after JP Morgan’s index on Wednesday delisted half of the maturities belonging to Nigeria.

The 10-year bond, among those to be delisted on the influential index, edged higher to yield 15.09 percent after the Debt Management Office (DMO) on Wednesday released its calendar showing it will re-introduce the benchmark paper, which was not issued in the third quarter.

The DMO said it will sell between N60 billion and N90 billion each in five- and 10-year bonds in each of the remaining three months of the year as re-openings of outstanding maturities.

JP Morgan removed half of Nigerian bonds listed on its emerging markets bond index (GBI-EM), as part of its month-end index rebalancing, cutting Nigeria’s weight to 0.79 percent.

The U.S. bank had warned Nigeria this month that it would drop it from its index, citing a lack of liquidity and currency restrictions.

Traders said bond yields were muted on Wednesday as foreign buyers had cut their exposure to 0.69 percent ahead of the index expulsion.

The 2024 bond to be issued from October will pay a coupon of 14.20 percent while the 2020 paper will pay 15.54 percent.

The Central Bank of Nigeria on Wednesday said the banking system had enough liquidity to take up what foreign investors might sell after JP Morgan removed Nigeria from its bond index.

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