Barbara Bako, Abuja.
Nigeria has returned to a major global bond benchmark after 11 years, with J.P. Morgan including selected Federal Government of Nigeria (FGN) bonds in its new Government Bond Index–Emerging Markets Edge (GBI-EM Edge).
The inclusion is expected to attract fresh foreign investment into Nigeria’s domestic debt market, improve bond liquidity and potentially lower the government’s borrowing costs.
J.P. Morgan assigned Nigeria a 7.40 per cent weighting in the index, one of the highest among the 26 markets covered and close to the eight per cent maximum country allocation.
The return marks Nigeria’s first inclusion in a J.P. Morgan bond benchmark since 2015, when the country exited the GBI-EM Global Diversified Index amid foreign exchange liquidity constraints.
The Federal Ministry of Finance said Nigeria’s re-entry reflects recent economic reforms, including the stabilisation of the naira, clearance of the foreign exchange backlog and improvements in growth and inflation.
Nigeria qualified for inclusion based on the liquidity of its FGN bonds and the size of outstanding issuances, with eligible bonds exceeding J.P. Morgan’s minimum requirements.
The new index tracks about $328 billion in local-currency government debt globally.
Nigeria’s 7.40 per cent weighting represents about $17.47 billion of eligible FGN debt across 16 instruments.
The ministry said index-tracking funds are expected to adjust their portfolios to reflect Nigeria’s weighting, potentially bringing additional foreign portfolio inflows into the domestic bond market.
It added that stronger demand for FGN bonds could support prices and compress yields, helping to reduce the cost of servicing the government’s naira-denominated debt.
Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, described the development as an independent endorsement of the government’s economic reforms.
“This inclusion is a clear, independent endorsement of the discipline behind President Bola Ahmed Tinubu’s reform agenda. It reflects the confidence international capital markets now place in Nigeria’s economic management, and it lowers the cost of financing our development priorities,” Oyedele said.
Nigeria was first included in the J.P. Morgan GBI-EM in 2012, a move that helped attract foreign capital and reduced the country’s cost of bond issuance by about 200 basis points.
Oyedele said the government would continue with reforms needed to secure full reinstatement in J.P. Morgan’s flagship emerging market bond index.
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