Nigeria has returned to a J.P. Morgan benchmark after 11 years, following the inclusion of selected Federal Government of Nigeria (FGN) Bonds in the newly introduced Government Bond Index–Emerging Markets Edge (GBI-EM Edge).
The Federal Ministry of Finance, in a statement on Monday, said the development reflected the impact of the Federal Government’s economic reforms, including the stabilisation of the naira, clearance of the foreign exchange backlog, and improvements in economic growth and inflation.
Nigeria secured a 7.40 per cent weighting in the index, placing it among the highest-weighted of the 26 markets covered and close to J.P. Morgan’s eight per cent maximum country weighting.
The ministry said Nigeria met the index’s key requirements of liquidity and issuance size, with FGN Bonds actively traded under a Two-Way Quote System and outstanding volumes per tenor exceeding the $250 million minimum requirement.
The inclusion marks Nigeria’s return to a J.P. Morgan benchmark since its exit from the GBI-EM Global Diversified index in 2015 amid foreign exchange liquidity constraints.
Commenting on the development, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, described the inclusion as “a clear, independent endorsement of the discipline behind President Bola Ahmed Tinubu’s reform agenda.”
Oyedele said the development reflected “the confidence international capital markets now place in Nigeria’s economic management,” adding that it would help lower the cost of financing the country’s development priorities.
“This inclusion is a clear, independent endorsement of the discipline behind President Bola Ahmed Tinubu’s reform agenda,” he said.
The minister added, “It reflects the confidence international capital markets now place in Nigeria’s economic management, and it lowers the cost of financing our development priorities.”
He, however, noted that the government was not taking the development for granted, saying, “We remain focused on the work still required to earn full reinstatement in J.P. Morgan’s flagship index.”
FGN Bonds were first included in the GBI-EM in 2012, a development that attracted significant foreign investment into Nigeria’s domestic securities market and reduced the cost of issuance by about 200 basis points.
The latest inclusion is expected to attract additional foreign portfolio inflows as index-tracking funds adjust their portfolios to reflect Nigeria’s weighting.
The ministry said increased foreign institutional demand could support bond prices and gradually ease domestic yields, helping to moderate the government’s cost of servicing naira-denominated debt.
The GBI-EM Edge tracks approximately $328 billion in local-currency government debt globally, with Nigeria’s 7.40 per cent allocation representing roughly $17.47 billion of eligible FGN debt across 16 instruments.
The ministry said improved liquidity in the FGN bond market could also have positive effects across the wider domestic debt market, including Nigerian Treasury Bills.
The Federal Government said it remained committed to sustaining its reform agenda and deepening investor confidence in the domestic market.