JP Morgan: No cause for alarm, DMO assures investors

jp morgan chase headquarters• How Nigeria can relist on world Index
• To issue auctions today 
THE Debt Management Office (DMO) yesterday appealed to foreign investors who have already withdrawn their portfolio investments from the Nigerian Bond Market to come back because the Nigerian Bond index has sufficient liquidity and remained a safe haven for their investments.

This is coming just as the Chief Executive Officer of the Nigerian Economic Summit Group (NESG), Mr. Laoye Jaiyeola, said that the threat was not the end of the world for the country but however said that the nation can be relisted on the world index platform if it took certain tough measures to strengthen the value of the naira.

JP. Morgan last week informed Nigeria that it would be delisted from its index by year end following what it described as liquidity challenges in the foreign exchange market which can enable foreign investors quickly repatriate their investment in crisis situation.

At press briefing in Abuja yesterday, the Director General of DMO, Dr. Abraham Nwankwo, dismissed JP Morgan’s proposed phasing out of FGN Bonds in its Government Bond Index – Emerging Markets (GBI –EM) and assured investors that the bonds remain the very safe and liquid securities they have always been.
In fact, he declared that another set of long tenor bond auction to raise more funds from the debt market will be issued tomorrow, Friday, 18th of September 2015.

Speaking in Abuja yesterday at a press conference to announce commencement of the 2Ist Nigerian Economic Summit (NES) holding from October I3th to I5th, Jaiyeola who is an investment expert and one time Chief Executive Officer of Kakawa Discount House said that Nigeria needed to take stringent steps to ensure it returned to the JP Morgan index such as the revamping of the manufacturing sector of the economy.

This he said would help shore up the value of the naira as well as demonstrates investment readiness of the country before foreign investors who use the Morgan index to decide business destinations of choice at any given time.

He said the Federal Government needs to tackle the salient issues raised by the world body, rather than avoid them, saying that they are achievable requirements, which Nigeria can meet if, determined.

Nwankwo then pleaded with foreign investors to continue with their longstanding interest in the market being fully aware that the Bonds remain the very safe and liquid securities they have always been.
He claimed that it was JP Morgan that applied to list FGN Bond on its index in 2012, nine years after the Nigerian government had developed its FGN Bond market all by itself with a crop wholly indigenous technocrats.

He maintained that the planned phasing out of the FGN Bond from the JP Morgan Index does not have any impact on the quality of the FGN Bonds. FGN Bonds they said “remain risk-free securities that are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.”

He said: JP Morgan’s action does not imply that the Bonds are no longer liquid because FGN Bonds are supported by an active Secondary Market which allows investors to buy or sell them on any business day through any of the 13 Primary Dealer Market Makers licensed by the DMO or on the Nigerian Stock Exchange where the Bonds are listed and for which purpose there is a Government Stockbroker (Stabic IBTC).”

According to Laoye, relisting of the country is crucial to avoid capital flight and to prevent a situation where foreign investors boycott the Nigeria economy. He urged the present government to view issues raised by the group seriously, even as he said that the nation’s economic status would be better off when done.

Secretary to the National Planning Commission, Dr. Bassey Akpanyung, in his remarks said that commencement of the National Economic Summit in October was apt because it would give a review to all sectors of the economy, especially being the first of its kind after transition of power to a new government.

Akpanyung who said that the structure of the summit this year would be all-inclusive in participation and scope, also noted that the summit would help guide government and and non-state actors on the best way forward.

He added that the issues of Treasury Single Account (TSA) proposed by the Mohammadu Buhari administration, the JP Morgan issue, educational policies, fiscal policies would all be evaluated during the summit to be graced by President Buhari at the opening of the 3-day event.
“The essence of the summit which is to be held in Abuja is to help in shaping the economy. Outcomes of the summit would be forwarded to government who would be broadly represented as well as the private sector, which NESG and the civil society groups represent. So participation is going to be all inclusive to reflect the change policies of the new government,” the secretary said.

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