The Director General of the Debt Management Office, Patience Oniha, says Nigeria is in advanced discussions with JP Morgan to rejoin its Government Bond Index, a move aimed at restoring investor confidence and attracting global capital inflows.
Oniha made this known during the Nigerian Investors’ Forum held on the sidelines of the World Bank and International Monetary Fund Spring Meetings in Washington, D.C.
She explained that Nigeria’s improved credit ratings, driven by recent economic and foreign exchange reforms, have positioned the country for a return to the index.
“With all the reforms that have taken place, particularly around FX, we have started engaging JP Morgan again to get back into the index. We think we are eligible now,” Oniha stated.
She highlighted that rating agencies have responded positively to the reforms.
Recently, Fitch Ratings upgraded the Long-Term Issuer Default Ratings (IDRs) of seven Nigerian banks and two bank holding companies from ‘B-’ to ‘B’, with Stable outlooks.
These include Access Bank Plc, Zenith Bank Plc, UBA Plc, GTBank Limited, GT Holding Company Plc, First HoldCo Plc, First Bank of Nigeria Ltd, Fidelity Bank Plc, and Bank of Industry Limited.
Fitch also upgraded Nigeria’s sovereign rating to ‘B’ from ‘B-’ on April 11, citing “increased confidence in the government’s broad commitment to policy reforms” including exchange rate liberalisation, monetary tightening, fiscal discipline, and fuel subsidy removal.
“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks,” Fitch noted.
Nigeria was initially included in the JP Morgan index in October 2012 following policy shifts that opened up the bond market to foreign investors.
However, in 2015, it was removed due to foreign exchange controls and market illiquidity triggered by a slump in oil revenues.
At the time, JP Morgan remarked, “Foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency.”
Nigeria had introduced currency restrictions in a bid to defend the naira, which significantly hindered foreign investor participation.
A return to the JP Morgan Government Bond Index is expected to signal renewed investor confidence and potentially unlock billions in investment flows into Nigeria’s bond market.
