The Debt Management Office on Monday listed and quoted the outstanding N4.847tn Federal Government of Nigeria bonds and N2.804tn Nigerian Treasury bills on the FMDQ OTC platform.
The FMDQ is a debt-focused over-the-counter securities exchange registered by the Securities and Exchange Commission in 2012.
The move, according stakeholders and analysts, will provide the general public easy access to trade in government debt securities.
They said the development would also enhance price discovery, transparency and liquidity for the newly listed securities.
The Director-General, DMO, Mr. Abraham Nwankwo, who represented the Federal Government at the listing and quotation ceremony in Lagos, described the listing as another milestone in the history of the development of the country’s domestic bond market.
He said FGN bonds and TBs had reached 66 per cent (N7.607tn) of the equities market as of December 2014, from 31 per cent in 2006.
Nwankwo, while speaking with our correspondent on the sidelines of the event, said, “For matured and important securities, you need to leave them on certain floors where they can trade, where people who want to buy can easily come and buy and where people who want to sell can do easily come and sell.
He noted that already the securities had always been in the Nigerian Stock Exchange, which is the traditional stock exchange where securities are bought and sold, including equities and debt instruments (bonds and treasury bills).
“However, many of the transactions on debt instruments, particularly FGN bonds and treasury bills, are transacted over-the-counter – people just pick the phone and call some other parties and they transact, so they don’t go through the floor of the stock exchange for various reasons.
“The significance of what has happened today is that the FMDQ has provided an additional platform so that even those securities that, for one reason or the other, are not trading on the NSE have an alternative platform. All the over-the-counter transactions now have a platform where they can easily trade.
“So it means there is a complement as well as a supplement to the existing stock exchange by this provision of OTC platform by the FMDQ. This type of platform ensures price discovery, transparency, easily access, easy monitoring and encourages internalisation.”
He described the listing of FGN bonds and TBs as another attestation of the commitment of the government to further develop and deepen the domestic debt market to enhance its performance of the pivotal role of financial intermediation – generating savings and investments necessary for economic growth.
The Chief Executive Officer, Chapel Hill, Mr. Bolaji Balogun, whose company was the listings and quotations sponsor, told our correspondent that in every market all over the world, bonds issued by the government were listed on public securities markets.
“These markets bring great governance, great disclosure, transparency, and these are all issues that are very important to the way in which the government conducts itself as an issuer,” he said.
“It just means that as we move forward, we are likely to see that the government is much more accountable and even more so about every naira it borrows because it is now in the public domain.
“And accountability means, for example, that we cannot go forward sustainably by continuing to borrow to pay salaries, we must borrow instead to bring physical infrastructure, social infrastructure, which are going to be beneficial ultimately to the average Nigerians, and that is the reason why today is a significant day.”
The Head, Investment and Research, Afrinvest West Africa Limited, Mr. Ayodeji Ebo, told our correspondent that with the listing on the FMDQ platform, “Investors are able to track activities on these instruments, hence, creating more comfort for the investors.”
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Source : Punch