The Director General of the Debt Management Office (DMO), Dr Abraham Nwankwo, on Wednesday said that the nations de-listing by JP Morgan from its emerging market bond index is not a true reflection of the nation’s economy.
Speaking at a news conference in Abuja, Dr Nwankwo told reporters that their action must have been informed by the crash in the price of oil.
He said that the nation’s economy has remained resilient compared with that of other oil exporting countries, stressing that the federal governments bond is still vibrant.
According to Nwankwo, Nigeria’s removal from the index “does not amount to a downgrade of Nigeria or FGN Bonds since JP Morgan is not a credit rating agency.
“It does not have any impact on the quality of the FGN Bonds.
“They remain risk-free securities that are backed by the full faith and credit of the Federal Government and are charged upon the general assets of Nigeria.
“It does not imply that the bonds are no longer liquid.’’
Liquid Currency Criteria
The index provider said Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months. It added that to get back in the reading, Nigeria would have to satisfy the consistent liquid currency criteria.
Meanwhile, the Central Bank of Nigeria, in reaction to the notice, said “it disagrees with the index expulsion”.
The apex bank also said it had started to improve liquidity and transparency in the market, just as foreign exchange traders confirmed that U.S. Dollars rationing to foreign investors has begun.
Nigeria became the second African country after South Africa to be listed in J.P. Morgan’s emerging government bond index, in 2012. Its inclusion adds a 1.8 per cent weight to the index.
JP Morgan Chase and Co. delisted Nigeria from its Government Bond Index for Emerging Markets (GBI-EM) for alleged lack of liquidity for transactions and transparency in the determination of exchange rate.
JP Morgan added Nigeria to its index in 2012 and on January 16, it placed Nigeria on a negative index watch and finally delisted Nigeria on September 8.
JP Morgan is the largest financial services holding company in the United States and the world’s fifth largest bank with total assets of $2.6 trillion.