Frank-C:



All the lies and misinformation going on today to spite GEJ rubs off on us all. People hate MTN for making too much profit but are ready to dismiss power sector reforms that will likely throw up another MTN. I only pity the uninformed who listen to some of you because they stand to lose out in the long run. I pity the unemployed who mock the cassava bread policy with agents of some political parties. I pity those who chose to stand on the sideline while Nigeria move forward. They hate MTN for making profit, GEJ for being the President, JTF for killing 'innocent' Boko Haram, Otedola and Dangote for having too much money...they hate everything coming from GEJ and his government even when it is meant to serve their children interest.

Yup, all the Billions of Dollars---$280Billion+---- that mysteriously disappeared from Government coffers since Jonaboy stepped on the scene nko? Abi those dont count too?

Cassava Bread?! Why didnt yall feed it to Dame P while she recuperated in LUTH? Oh, yeah, thats right... LUTH is for the poor dumb Nigerians who havent had the opportunity to loot the treasury. Why did she have to go to Germany? Yall shoulda left her in a Naija hospital so she can experience what it feels like when the Electricity goes out while shes on the operating table.

So, GEJ telling all that he devours N1Billion Naira in food should make people glad? And wetin concern Fashola inside all of this?

Damn, you guys are sick and hungry folks like you that will gladly spread false info just because of the crumbs politicians feed you are obviously sicker.

Isale_eko:
All the ratings you noted above does not have anything to do with this purely financial transaction. The Indexes JP Morgan saw are those that are ignored by opposition politicians, which even the Government is silent on because they know Nigerians will not understand them. I will spell some of them out.

The total debt to GDP ratio in Nigeria is just 18%; global emerging market average is about 60%. Greece is almost 150% and Italy is about 120% and the US is 100%. This means the debt Nigeria holds is not enough to bring the country to a standstill if we have to liquidate them in one week.

The Nigerian budget deficit is just about 2% of GDP. The global average is about 10 - 15%, which means Nigeria borrows very little to finance her budget when compared with other economies.

While the Naira has depreciated over a very long time, it has been stable for two years with very little volatility. It is also the best performing currency in Africa gaining 2% to the US dollars year to date.

All these figures give foreign investors confidence. They might not make a lot of sense to you but I can assure you that it is a very good start. A good one. And there is hope for Nigeria.

We had discussed how misleading ratios like 'debt to GDP' or 'deficit financing' are.

This is what I wrote somewhere in early August:

Pukkah:

The government needs to drop all this debt-to-GDP ratio arguments. This ratio means different things for different economies depending on the rate of growth, the GDP growth drivers, and future ability to repay loans. Moreso, it's not an easy task to determine a good debt-to-GDP ratio.

If you must take loans then tie them tightly to specific projects. Pursue aggressive cut-down of the bogus recurrent expenditure which is over 70% so that you can have the much-needed savings for infrastructure. Pursue the corrupt politicians to wherever they are and recover at least part of the loot. At least all the ex-governors, ministers, LG chairmen are not covered by the immunity clause.



What has President Jonathan used the N1.2trillion that was collected within a year of his administration for? Has he set debt limits for the various levels of government as demanded by the Fiscal Responsibility Act?

The Federal Government and many states of the federation are just collecting loans like drunken sailors. This is in addition to the proceeds which some of them have got from issuance of bonds along with the usual federal allocations and IGR. In July 2012 alone, the FG and the states shared N830billion. From the partial removal of subsidy of subsidy, the state and federal governments have also shared N248billion out of which the FG got N105billion. This is apart from the excess crude account.

Please, where is the evidence of all these revenues and inflows? The roads are still bad and infrastructure is still in tatters, yet government at all levels continue to borrow.

As an aside, there should also be more focus on the various state governors on how they are spending all these inflows.



As the quest for more debts continue unchecked, so will the debt servicing amount continue to climb. How much is being paid back out of these loans as they continue to pile more and more on them? What is the interest rate(s) of these loans?

Pukkah:

You've already answered the question. Perhaps. May be. Now, I ask you, is this worth applauding? Need I say anything more?

Nigeria is so attractive potentially because if its huge market and infrastructural deficit so much that the country does not necessarily need any listing to attract foreign investment or investors.

Do you know what is putting so many investors that don't even need a dime from the government at bay? Corruption. You sound like an analyst but I don't know how much of the workings of government or the real frustrations to business you are familiar with. But, I tell you, corrupt government officials that demand for cuts and gratification are the ones killing the economy and it's not the listing of bonds on the index that will solve that.

Right now in Nigeria, who is fighting corruption? Or we expect that Index listing will somehow fight it for us because by then the global market/investors would look at Nigeria very well? The Oil and Gas sector that has witnessed foreign investment is an example.

Of course banks will be happy about this because they will get more fee income, whether or not the bonds proceeds are used for the purpose intended.

It is because of the corruption that we need the foreign investors to come in fast. We need to privatize the economy very quickly in order to reduce the pie available for politicians to steal. With Government running so many businesses and running them aground, we need many of the sectors in Nigeria to open up for competition and innovation. We saw what happened when Government left the banking industry. We saw what happened when they left telecoms, we will soon see what will happen when the power sector is fully privatized and hopefully the downstream petroleum sector.

See businesses like Nigerian Railway Corporation, NNPC, Nitel, Nipost, etc. At least there is no money to steal from Nitel again (corruption reduced in that sector because of privatization) and hopefully NNPC will be the next. Look at the companies that came up when the Govt handed the sectors over such as the GTB, MTN, etc. They may have issues because of many factors such as poor infrastructure but they deliver services.

Once again, we need foreign investors to come into Nigeria and bridge the infrastructure gap. Nigerian banks CANNOT bankroll the power sector alone, not to talk of Oil and Gas. I repeat that the incursion of JP Morgan into our market is welcome. It is a right step in the right direction.

If you see any negatives to the Nigerian economy or possible fallout from the entrant of JP Morgan into Nigeria, speak out. Because as far as I can see and as far as your post is concerned, Nigeria has nothing to lose. Absolutely nothing to lose and so much more to gain.

Frank-C:


If only you understood the meaning of sarcasm. I don't understand how an enlightened mind will argue the implication of major economic/development indicators all in an effort to spite the government. If you can't measure it, you can't control it but some folks prefer to measure temperature with their fingers since according to them, 'thermometer is invented by the white man to control how the black man feels heat'. I think this is the argument of the people dismissing Nigeria appearance on the radar of positive economic development.

All the lies and misinformation going on today to spite GEJ rubs off on us all. People hate MTN for making too much profit but are ready to dismiss power sector reforms that will likely throw up another MTN. I only pity the uninformed who listen to some of you because they stand to lose out in the long run. I pity the unemployed who mock the cassava bread policy with agents of some political parties. I pity those who chose to stand on the sideline while Nigeria move forward. They hate MTN for making profit, GEJ for being the President, JTF for killing 'innocent' Boko Haram, Otedola and Dangote for having too much money...they hate everything coming from GEJ and his government even when it is meant to serve their children interest.

So you had time for sarcasm? Talk straight man and let's know where you belong. Show your hand!

See, discuss the issues here and don't 'appeal to pity'. How does this lead to development when there is no fight against corruption? What's happening to the inflows of government currently?

The average Nigerian has been lied to and deceived too many times for him to jump for joy because Nigeria as an emerging market is listing her bonds.

Pukkah:

We had discussed how misleading ratios like 'debt to GDP' or 'deficit financing' are.

This is what I wrote somewhere in early August:

I am right with you with taking those ratios with a pinch of salt. But here is something to note.

1. The Nigerian Government did not call JP Morgan to come to Nigeria. JP Morgan did their analysis, they liked what they saw and they came.
2. Nigerians have nothing to lose with JP Morgan coming into Nigeria as Nigeria is NOT borrowing money from them because they are coming to buy existing debts. So they are the ones begging Nigeria to borrow money. It is JP Morgan that has something to lose.
3. Nigeria does not have any written obligation to do anything for JP Morgan because the debts are Naira denominated
4. The incursion of JP Morgan into Nigeria will improve the standing of the Naira with the attendant capital inflow
5. By buying these bonds, this will drive down yields in the bond market and will force the banks to lend to the economy as yields drop below inflation levels

I still await to hear what Nigeria has to lose from this transactions.

There is a lot of problem with Nigeria and I reiterate that these transactions will not in any way worsen our situation. We have more to gain.

jmaine: They must have been paid to list us . . . . . . . What a clueless Gov . . . . . .

....what a clueless comment

kingoflag:


Yup, all the Billions of Dollars---$280Billion+---- that mysteriously disappeared from Government coffers since Jonaboy stepped on the scene nko? Abi those dont count too?

Cassava Bread?! Why didnt yall feed it to Dame P while she recuperated in LUTH? Oh, yeah, thats right... LUTH is for the poor dumb Nigerians who havent had the opportunity to loot the treasury. Why did she have to go to Germany? Yall shoulda left her in a Naija hospital so she can experience what it feels like when the Electricity goes out while shes on the operating table.

So, GEJ telling all that he devours N1Billion Naira in food should make people glad? And wetin concern Fashola inside all of this?

Damn, you guys are sick and hungry folks like you that will gladly spread false info just because of the crumbs politicians feed you are obviously sicker.

$280billion? hahaha...kai! Kingoflag plz do a head check asap, abeg( i have told you b4 and am damn serious o). I dont know what you eat or drink but they are sure not good, plz check those too....

*continueslaughing* una no go kill pason 4 dis NL one day

So are we now glorifying DEBT? Glorifying our ability to become one of the top rated debtors in the world?

Isale_eko:

I am right with you with taking those ratios with a pinch of salt. But here is something to note.

1. The Nigerian Government did not call JP Morgan to come to Nigeria. JP Morgan did their analysis, they liked what they saw and they came.
2. Nigerians have nothing to lose with JP Morgan coming into Nigeria as Nigeria is NOT borrowing money from them because they are coming to buy existing debts. So they are the ones begging Nigeria to borrow money. It is JP Morgan that has something to lose.
3. Nigeria does not have any written obligation to do anything for JP Morgan because the debts are Naira denominated
4. The incursion of JP Morgan into Nigeria will improve the standing of the Naira with the attendant capital inflow
5. By buying these bonds, this will drive down yields in the bond market and will force the banks to lend to the economy as yields drop below inflation levels

I still await to hear what Nigeria has to lose from this transactions.

There is a lot of problem with Nigeria and I reiterate that these transactions will not in any way worsen our situation. We have more to gain.

Kindly note that I never stated or implied that the transaction will worsen the situation of Nigeria. My stand, which I am yet to change, is that it not worthy inviting drummers for or throwing a party the way the President's sycophants - paid and unpaid - had already started going. Transactions like this should just happen and there should be no attempt to give it a political spin or put it under the 'transformation' agenda of someone. First of all, how are they spending what they have now?

Remember the improved Fitch rating that Nigeria got under Obasanjo? They rolled out the drums and rejoiced. At the end of the day, did it make the ordinary man on the street fare better? It was the same way that Aganga was going on and on about the debt to GDP ratio.

C_Collins:

YOU'RE THE HATER, IF YOU TRULY LOVE NIGERIA, YOU WILL KNOW THAT NOTHING IS MOVING FORWARD IN THIS COUNTRY.

Wrong. Crime, avarice, cupidity, massive looting, all of these are moving forward.

kunlekunle:

GEJ is better than you, since he was clueless.
what do you think is happening in Europe and America,
All your oil money would go down the drain over night.

Jug head try amd think and dont jump at the thunderous sound its gonna rain.

Just shut it, you ignorant creep.

Isale_eko:

It is because of the corruption that we need the foreign investors to come in fast. We need to privatize the economy very quickly in order to reduce the pie available for politicians to steal. With Government running so many businesses and running them aground, we need many of the sectors in Nigeria to open up for competition and innovation. We saw what happened when Government left the banking industry. We saw what happened when they left telecoms, we will soon see what will happen when the power sector is fully privatized and hopefully the downstream petroleum sector.

See businesses like Nigerian Railway Corporation, NNPC, Nitel, Nipost, etc. At least there is no money to steal from Nitel again (corruption reduced in that sector because of privatization) and hopefully NNPC will be the next. Look at the companies that came up when the Govt handed the sectors over such as the GTB, MTN, etc. They may have issues because of many factors such as poor infrastructure but they deliver services.

Once again, we need foreign investors to come into Nigeria and bridge the infrastructure gap. Nigerian banks CANNOT bankroll the power sector alone, not to talk of Oil and Gas. I repeat that the incursion of JP Morgan into our market is welcome. It is a right step in the right direction.

If you see any negatives to the Nigerian economy or possible fallout from the entrant of JP Morgan into Nigeria, speak out. Because as far as I can see and as far as your post is concerned, Nigeria has nothing to lose. Absolutely nothing to lose and so much more to gain.

May I also add, that privatization is not the only model to run governments successfully. This is one of the reasons one needs to be cautious in embracing some of these World Bank and IMF ideologies.

Unlike what many people believe, the way the developing countries have performed in the period of state-led development (1960s and 70s) was superior to what they have achieved during the subsequent period of market-oriented reform (1980 - 2000).

Since the 1980s, most of the developing countries have experienced a significant deceleration in economic growth. Per capita income growth in the developing world fell from 3% per year in the 1960s and 70s to 1.7% during the 1980 - 2000 period, when there was the greatest number of free-market reforms.

During the 2000s, there was a pick-up in the growth of the developing world, bringing the growth rate up to 2.6% for the 1980-2009 period, but this was largely due to the rapid growth of China and India - two giants that while liberalizing, did not embrace neo-liberal policies.

Few countries have become rich through free-trade and free-market policies and few ever will. Most of today's rich countries, including Britain and the US - the supposed homes of free trade and free market - have become rich through the combinations of protectionism, subsidies and other policies that today they advise developing countries not to adopt.

.

With the kind of corruption going on in government, and the seemingly helplessness of Nigerians in holding the government accountable due to ethnoreligious differences, I am pretty certain privatization of government-owned businesses is the way to go, at this time.

Pukkah:

May I also add, that privatization is not the only model to run governments successfully. This is one of the reasons one needs to be cautious in embracing some of these World Bank and IMF ideologies.

Unlike what many people believe, the way the developing countries have performed in the period of state-led development (1960s and 70s) was superior to what they have achieved during the subsequent period of market-oriented reform (1980 - 2000).

Since the 1980s, most of the developing countries have experienced a significant deceleration in economic growth. Per capita income growth in the developing world fell from 3% per year in the 1960s and 70s to 1.7% during the 1980 - 2000 period, when there was the greatest number of free-market reforms.

During the 2000s, there was a pick-up in the growth of the developing world, bringing the growth rate up to 2.6% for the 1980-2009 period, but this was largely due to the rapid growth of China and India - two giants that while liberalizing, did not embrace neo-liberal policies.

Few countries have become rich through free-trade and free-market policies and few ever will. Most of today's rich countries, including Britain and the US - the supposed homes of free trade and free market - have become rich through the combinations of protectionism, subsidies and other policies that today they advise developing countries not to adopt.

Pukkah:

Kindly note that I never stated or implied that the transaction will worsen the situation of Nigeria. My stand, which I am yet to change, is that it not worthy inviting drummers for or throwing a party the way the President's sycophants - paid and unpaid - had already started going. Transactions like this should just happen and there should be no attempt to give it a political spin or put it under the 'transformation' agenda of someone. First of all, how are they spending what they have now?

Remember the improved Fitch rating that Nigeria got under Obasanjo? They rolled out the drums and rejoiced. At the end of the day, did it make the ordinary man on the street fare better? It was the same way that Aganga was going on and on about the debt to GDP ratio.

Your stand as I saw it on this issue as stated earlier by you:

Pukkah:

Thank you! But has the country even demonstrated that it needs access to more finance?

The more the access to finance they get (through increases in IGR, oil revenues - increasing prices and quantity of barrels pumped per day, FIRS and Customs revenues,local banks' debts, contractors' debts, bonds, etc) the more they steal. That's about where the direct relationship stops.

When one looks at the front page of Nairaland today and sees headlines like 'All Federal Roads In The South-East Are Dilapidated' and 'Did Jonathan Lie In His Independence Day Speech?' together with the Tribune news item of 'Nigeria earned N5.5trn in 8 months'; all of which give an indication of decaying infrastructure, even when revenues are going up, amidst a weak and lack-lustre fight against corruption, you may want to ask yourself:

does a wasteful/corrupt government really need more access or less access to finance?

And you also wanted to know this:

Pukkah:

Kindly educate me, how does listing of FGN bonds on some index, or even the issuance of new bonds or trading of existing bonds, whether for the participation of local or foreign investors, mean that Nigeria is surely moving forward?

I simply pointed out to you how and why Nigeria as a country, not the Government, needs more access to finance. Many thanks to Actis and IFC for believing in Nigeria and investing in Mouka foam, Tantalizers, UACN, Diamond bank, Ecobank, etc and not the Federal Government of Nigeria. This is what we are looking for and this is likely to increase as JP Morgan funds flow into the economy. We should roll out the drums for the world to see so that we can have more roads like Lekki-Epe Expressway handled by foreign funds and less of Apapa-Oshodi Expressway handled by the FGN. As for the political spin, count me out. I don't support it and I don't do politics until the moment I cast my vote.

I have also explained how the purchase of FGN bonds denominated in Naira will make foreign investors look our way and help us to build the infrastructure gap of N100 trillion, which we cannot finance on our own

Pukkah:

May I also add, that privatization is not the only model to run governments successfully. This is one of the reasons one needs to be cautious in embracing some of these World Bank and IMF ideologies.

Unlike what many people believe, the way the developing countries have performed in the period of state-led development (1960s and 70s) was superior to what they have achieved during the subsequent period of market-oriented reform (1980 - 2000).

Since the 1980s, most of the developing countries have experienced a significant deceleration in economic growth. Per capita income growth in the developing world fell from 3% per year in the 1960s and 70s to 1.7% during the 1980 - 2000 period, when there was the greatest number of free-market reforms.

During the 2000s, there was a pick-up in the growth of the developing world, bringing the growth rate up to 2.6% for the 1980-2009 period, but this was largely due to the rapid growth of China and India - two giants that while liberalizing, did not embrace neo-liberal policies.

Few countries have become rich through free-trade and free-market policies and few ever will. Most of today's rich countries, including Britain and the US - the supposed homes of free trade and free market - have become rich through the combinations of protectionism, subsidies and other policies that today they advise developing countries not to adopt.

Privatization is not the only way to grow but unfortunately that is the only option we have. If you are looking for your Government to drive growth, you will wait forever because they are deaf and dumb. They believe they are winning the war on corruption. If they think they are, and we believe they are not, how can you then look up to them to drive growth? I have also explained how useless your Government is when it comes to running businesses and I gave examples like Nitel, NNPC, NRC, Nigerian Airways.

Unfortunately, the only option left for us is privatization. And once again, let me remind you, even if your Government comes clean and kill corruption totally, how can it use its budget of N5 trillion per year to invest in infrastructure that needs N100 trillion to build?

Akanbi_edu: With the kind of corruption going on in government, and the seemingly helplessness of Nigerians in holding the government accountable due to ethnoreligious differences, I am pretty certain privatization of government-owned businesses is the way to go, at this time.

I don't have a stronger argument to counter your position. I was just noting something about the need to be circumspect or unduly ecstatic about some policies or indices. It is a pity the way things are. It is only a government that is not corrupt that can choose winners and make state-led enterprises work.

Pukkah:

I don't have a stronger argument to counter your position. I was just noting something about the need to be circumspect or unduly ecstatic about some policies or indices. It is a pity the way things are.

It is really, but we must move on as a people. My thinking is if we get the economy right, by reducing the government's involvement well enough, we might just create a class self-sufficient enough to challenge government in the nearest future. Almost everything touched by the Nigerian govt becomes a failure automatically.

Isale_eko: It is so unfortunate that many Nigerians are so blinded with hatred for the Government that they just do not see anything good come out of it, no matter what. It does not matter what they do, everything gets twisted and anything positive turns negative.



Let me explain the deal with JP Morgan in as simple terms as possible. JP Morgan runs an International Government Bond Index that includes the sovereign bonds of most developed economies and selected emerging economies. Nigeria met up with all their necessary criteria and the size of the Nigerian FGN bond in the Index is going to be between 0.5% - 1.0%. Nigeria is NOT going to issue bonds (or debt) for JP Morgan to be purchased. JP Morgan will come to Nigeria and buy the bonds from the Nigerian bond market just the same way foreign investors come to buy stocks on the Nigerian Stock Exchange. This Bond Index is run by JP Morgan and held passively by investors who want to have international exposure in their portfolios. This Index is not available for everyone so many other international financial houses try to mimic the Index by copying or replicating any purchase, sale or rebalancing that JP Morgan does.

Because of this inclusion, international investors will be forced to take a closer look at Nigeria and the potentials available in other sectors. This will also force the Nigerian Government to be more accountable as global economic lenses are focused on Nigeria. It is not a silver bullet that will solve our problems but it is a very good start.

Why is it a good start? The main problems we have in Nigeria is infrastructure deficit in the region of N100 trillion to N125 trillion. Nigeria does not have the capacity to finance this. We have a budget of just N5 trillion per year and even if we spend 100% of it in bridging the gap, we are looking at 20 - 25 years. This does not factor in inflation. And this also means university lecturers, doctors, perm secs, senators, presidents and all those that depend on Govt will not be paid for 20 years or more. The only way to bridge this gap is to attract foreign investments. And if you think Nigerian banks can finance infrastructure, let me remind you that all the bank assets in Nigeria are just N10 trillion. We just don't have the money to do this on our own.

Perhaps the inclusion of Nigeria in the JP Morgan International Bond Index might just help us. Maybe.

1. There is a difference between a fund and an index; what you described is a fund. An index is used mainly to measure financial instruments that have been identified/selected. The index is a benchmark against which investment portfolios are measured. If you track an index, then you can't beat it or be worse of. The FTSE 100 is an index tracking the leading 100 companies listed in London.

2. JP Morgan does not need to visit Nigeria to buy Nigerian sovereign bonds. It simply needs to buy from whatever market the bonds are issued in.

3. If the bonds are traded in a public/secondary market, then any investor can acquire them as long as there are no rules prohibiting the investor from acquiring them.

4. Selling your sovereign bonds on a public market will not make you more accountable. Take a look at Greece. If you cook your books, the rate on your bond simply goes so high that it becomes non-viable for you to borrow in financial markets as investors demand a higher return to compensate for the additional risk. That is why Greek bonds required double digit rates and Spanish/Italian bonds exceeded the 7% mark thereby preventing them from borrowing more funds.

5. Nigeria has to far failed to utilize the revenue it derives from oil judiciously; it has no business borrowing from international markets. Accountability and continuity is lacking in Nigeria. GEJ will borrow funds from the markets leaving his successors to deal with paying capital to investors.

Isale_eko: It is so unfortunate that many Nigerians are so blinded with hatred for the Government that they just do not see anything good come out of it, no matter what. It does not matter what they do, everything gets twisted and anything positive turns negative.




All the ratings you noted above does not have anything to do with this purely financial transaction. The Indexes JP Morgan saw are those that are ignored by opposition politicians, which even the Government is silent on because they know Nigerians will not understand them. I will spell some of them out.

The total debt to GDP ratio in Nigeria is just 18%; global emerging market average is about 60%. Greece is almost 150% and Italy is about 120% and the US is 100%. This means the debt Nigeria holds is not enough to bring the country to a standstill if we have to liquidate them in one week.

The Nigerian budget deficit is just about 2% of GDP. The global average is about 10 - 15%, which means Nigeria borrows very little to finance her budget when compared with other economies.

While the Naira has depreciated over a very long time, it has been stable for two years with very little volatility. It is also the best performing currency in Africa gaining 2% to the US dollars year to date.

All these figures give foreign investors confidence. They might not make a lot of sense to you but I can assure you that it is a very good start. A good one. And there is hope for Nigeria.

Countries that have been borrowing from financial markets for decades have all run into trouble in the last 4 years. Many European countries are still beset with repaying debts to investors. Nigeria does not have the maturity (accountability, maturity, vision, etc) to borrow from financial markets.

When a country is unable to repay its debts, one of three things happen
1. Default - you can not borrow any longer for a long time
2. Debt restructuring - IMF & WB come in and tell you to implement austere measures which puts untold hardship on the citizenry (and in the case of Nigeria, citizenry that are unlikely to benefit from the funds anyway)
3. You attempt austerity and still default.

The bottom line is that without Nigeria using funds more judiciously, unborn Nigerians will SUFFER. Most especially has the developed world is reducing its dependence on oil.

Katsumoto:

1. There is a difference between a fund and an index; what you described is a fund. An index is used mainly to measure financial instruments that have been identified/selected. The index is a benchmark against which investment portfolios are measured. If you track an index, then you can't beat it or be worse of. The FTSE 100 is an index tracking the leading 100 companies listed in London.

2. JP Morgan does not need to visit Nigeria to buy Nigerian sovereign bonds. It simply needs to buy from whatever market the bonds are issued in.

3. If the bonds are traded in a public/secondary market, then any investor can acquire them as long as there are no rules prohibiting the investor from acquiring them.

4. Selling your sovereign bonds on a public market will not make you more accountable. Take a look at Greece. If you cook your books, the rate on your bond simply goes so high that it becomes non-viable for you to borrow in financial markets as investors demand a higher return to compensate for the additional risk. That is why Greek bonds required double digit rates and Spanish/Italian bonds exceeded the 7% mark thereby preventing them from borrowing more funds.

5. Nigeria has to far failed to utilize the revenue it derives from oil judiciously; it has no business borrowing from international markets. Accountability and continuity is lacking in Nigeria. GEJ will borrow funds from the markets leaving his successors to deal with paying capital to investors.

1. The reasons Index are created are for funds that are linked to the Index to track them. Fund managers that want a passive investment will need to commit funds into the Index that has been created by JP Morgan. By the way, JP Morgan has a fund that tracks the Index and that is the reason, they and other managers that track the Index will come and buy the bonds.

2. Which other markets are the FGN bonds listed?

3. The bonds are traded OTC in Nigeria with several market makers with the Financial Market Dealers Association (http://www.fmda.com.ng) provides the bid-ask quotes.

4. You contradict yourself. When the yields rise to high it becomes prohibitive to borrow, the Government will be forced to check itself, if it still wants to borrow. You mess up and you find yourself in the Greece situation where you can no longer borrow. So, indirectly, there are forced to become accountable like Greece, Italy and Spain.

5. Nigerians, including me, don't care too much about the Government and we are not interested in Government borrowing. We are interested in the ancillary interests that will be aroused by the fact that JP Morgan has placed Nigeria in the global financial map. We hope, and pray, that foreign investors will see this and follow Actis and IFC into Nigeria by bringing direct investments, not hot monies through portfolio investments.

Isale_eko:

It is because of the corruption that we need the foreign investors to come in fast. We need to privatize the economy very quickly in order to reduce the pie available for politicians to steal. With Government running so many businesses and running them aground, we need many of the sectors in Nigeria to open up for competition and innovation. We saw what happened when Government left the banking industry. We saw what happened when they left telecoms, we will soon see what will happen when the power sector is fully privatized and hopefully the downstream petroleum sector.

See businesses like Nigerian Railway Corporation, NNPC, Nitel, Nipost, etc. At least there is no money to steal from Nitel again (corruption reduced in that sector because of privatization) and hopefully NNPC will be the next. Look at the companies that came up when the Govt handed the sectors over such as the GTB, MTN, etc. They may have issues because of many factors such as poor infrastructure but they deliver services.

Once again, we need foreign investors to come into Nigeria and bridge the infrastructure gap. Nigerian banks CANNOT bankroll the power sector alone, not to talk of Oil and Gas. I repeat that the incursion of JP Morgan into our market is welcome. It is a right step in the right direction.

If you see any negatives to the Nigerian economy or possible fallout from the entrant of JP Morgan into Nigeria, speak out. Because as far as I can see and as far as your post is concerned, Nigeria has nothing to lose. Absolutely nothing to lose and so much more to gain.

The presence of foreign investors will not reduce corruption. Investors will simply price the risk of investing in corrupt nations like Nigeria. If investors require 3% in Germany, 7% in China, they will require over 12% in Nigeria.

The other point to take into consideration is the outlook of investors. If they don't have a longterm outlook, they will simply attempt to make profit in the short term, increase debt (borrow more), and flee.

Katsumoto:

Countries that have been borrowing from financial markets for decades have all run into trouble in the last 4 years. Many European countries are still beset with repaying debts to investors. Nigeria does not have the maturity (accountability, maturity, vision, etc) to borrow from financial markets.

When a country is unable to repay its debts, one of three things happen
1. Default - you can not borrow any longer for a long time
2. Debt restructuring - IMF & WB come in and tell you to implement austere measures which puts untold hardship on the citizenry (and in the case of Nigeria, citizenry that are unlikely to benefit from the funds anyway)
3. You attempt austerity and still default.

The bottom line is that without Nigeria using funds more judiciously, unborn Nigerians will SUFFER. Most especially has the developed world is reducing its dependence on oil.

I agree with you on all points except one.

Nigeria has been able to borrow from the financial markets with a $500 million Eurobond currently yielding just above 5% with a BB- rating. It is about three steps lower than Spain and Italy but it has lower yields than that of Spain and Italy with the same maturity. Interpretation: Global financial markets trust Nigeria to repay its loan than Spain and Italy.

Katsumoto:

The presence of foreign investors will not reduce corruption. Investors will simply price the risk of investing in corrupt nations like Nigeria. If investors require 3% in Germany, 7% in China, they will require over 12% in Nigeria.

The other point to take into consideration is the outlook of investors. If they don't have a longterm outlook, they will simply attempt to make profit in the short term, increase debt (borrow more), and flee.

Read through my posts all over again and you will discover that Nigerians, including me, don't care much about portfolio inflows. We are hopeful that this will attract FDI (foreign direct investments).

Isale_eko:

1. The reasons Index are created are for funds that are linked to the Index to track them. Fund managers that want a passive investment will need to commit funds into the Index that has been created by JP Morgan. By the way, JP Morgan has a fund that tracks the Index and that is the reason, they and other managers that track the Index will come and buy the bonds.

2. Which other markets are the FGN bonds listed?

3. The bonds are traded OTC in Nigeria with several market makers with the Financial Market Dealers Association (http://www.fmda.com.ng) provides the bid-ask quotes.

4. You contradict yourself. When the yields rise to high it becomes prohibitive to borrow, the Government will be forced to check itself, if it still wants to borrow. You mess up and you find yourself in the Greece situation where you can no longer borrow. So, indirectly, there are forced to become accountable like Greece, Italy and Spain.

5. Nigerians, including me, don't care too much about the Government and we are not interested in Government borrowing. We are interested in the ancillary interests that will be aroused by the fact that JP Morgan has placed Nigeria in the global financial map. We hope, and pray, that foreign investors will see this and follow Actis and IFC into Nigeria by bringing direct investments, not hot monies through portfolio investments.

1. And where in the article does it state that JP Morgan has a fund which tracks that index?

2. I believe Nigeria first raised funds in London. I am unaware of bonds being issued by the federal government in Nigeria.

3. OTC does not prevent investors from accessing instruments; just simply means that the trade is bilateral.

4. You may become accountable in the long term but in the short to medium term, you have to implement austerity measures which hurt your citizens. Why do you think there have been protests in Greece, Spain, and Portugal?

5. So Nigerians should not be concerned about borrowing? Are you kidding me? Who do you think will pay if there is a default?

Isale_eko:

I agree with you on all points except one.

Nigeria has been able to borrow from the financial markets with a $500 million Eurobond currently yielding just above 5% with a BB- rating. It is about three steps lower than Spain and Italy but it has lower yields than that of Spain and Italy with the same maturity. Interpretation: Global financial markets trust Nigeria to repay its loan than Spain and Italy.

Not true

Yields for Spain and Italy have been going up and down for the past 18 months. They traded above 7% a few months ago, went down below 4% after ECB president, Draghi, stated that the ECB would buy sovereign bonds and have gone up this week (above 5%) as fears are mounting that Spain will request a bailout.

Besides, Nigeria is not very active in the bond markets and has a low debt to GDP ratio. I guarantee you that if Nigeria borrows regularly, its yield would be much higher than all European countries (including Greece).

Isale_eko:

Read through my posts all over again and you will discover that Nigerians, including me, don't care much about portfolio inflows. We are hopeful that this will attract FDI (foreign direct investments).

You are naive if you think that foreign investors will invest directly in Nigeria simply on the basis of its bonds being included in an index. You want to ignore
1. No infrastructure
2. Corruption
3. No education
4. Unstable political structure
5. Risks to Safety and security of life in most parts of Nigeria

You think foreign investors have bucket loads of money to waste? When Nigeria starts to invest wisely in infrastructure, education and becomes a mature nation, then investors may flood in.

Katsumoto:

1. And where in the article does it state that JP Morgan has a fund which tracks that index?

2. I believe Nigeria first raised funds in London. I am unaware of bonds being issued by the federal government in Nigeria.

3. OTC does not prevent investors from accessing instruments; just simply means that the trade is bilateral.

4. You may become accountable in the long term but in the short to medium term, you have to implement austerity measures which hurt your citizens. Why do you think there have been protests in Greece, Spain, and Portugal?

5. So Nigerians should not be concerned about borrowing? Are you kidding me? Who do you think will pay if there is a difficult?

1. Call JP Morgan to get the full details

2. Hmm. So where did I get the FGN Bond January 2022 with a coupon rate of 16.39%, which the JP Morgan Index included?

3. What is your point and how does it verify your original post?

4. First, you say, it does not make Governments more accountable, now you say they may become accountable in the long run. Contradictions. I still don't see how the protests in Greece tie into the JP Morgan and Nigeria story and why it should arise. My point is, we don't care about the Govt. We want foreign direct investment, which will improve privatization and reduce Government exposure to running businesses. If the Govt does not control businesses, how will austerity measures affect us apart from politicians?

5. Read, we rejoice because of the potential FDIs, not the Govt borrowing. Read again.

Katsumoto:

Not true

Yields for Spain and Italy have been going up and down for the past 18 months. They traded above 7% a few months ago, went down below 4% after ECB president, Draghi, stated that the ECB would buy sovereign bonds and have gone up this week (above 5%) as fears are mounting that Spain will request a bailout.

Besides, Nigeria is not very active in the bond markets and has a low debt to GDP ratio. I guarantee you that if Nigeria borrows regularly, its yield would be much higher than all European countries (including Greece).

So you agree that Nigeria has been able to borrow from the international market contrary to your original position that Nigeria cannot access finance? Your own words are reprinted below:

Nigeria does not have the maturity (accountability, maturity, vision, etc) to borrow from financial markets.

You keep contradicting yourself, sir. You also agree that Nigeria has very low debt to GDP, yet you keep comparing Nigeria with countries taking austerity measures with debt to GDP ratio of over 150%.

taharqa: $280billion? hahaha...kai! Kingoflag plz do a head check asap, abeg( i have told you b4 and am damn serious o). I dont know what you eat or drink but they are not good, plz check those too....*continueslaughing* una no go kill pason 4 dis NL one day

Ummm yeah, $280+.... U forgot the + by the way.

How much was in the treasury when he came in? How much was left 6 months later? Bros, how much do you think the subsidy scam has cost the Nation and how much do you think other scams that GEJ is running on the side is costing the country, or you want me to put Richard Branson on the phone? Theyve sold and bribed PHCN amongst one another; oh you think it was for free? Or you want us to talk of GEJ and Diezani and how they split Oil wells among their crew like its christmas candy? Oh, you think those Oil wells generate money on the scale of Okada business?! You guys dont know jack, by the time theyre done with you......

Tell me a little bit more about DANA Airways and how all charges agains them magically disappeared? Oh, you think it was for free? And please dont tell me that the decision to let Dana Airways off the hook was that of the Aviation Minister alone.

YES $280+Billion!!! Thats my estimate, and trust, thats a conservative estimate of how much financial damage GEJ has done to Nigeria. Maybe, I should even up it to like $1Zillion seeing how much of a crook GEJ has shown himself to be. So, you can take a brick and hit yourself in the head with it if youre mad at/dont "agree" with my figures, the onus is on you to prove that he hasnt stolen "that much", because if theres one thing I know we'll both agree on its that GEJ is super-corrupt. Or are you going to argue too that GEJ is not a crook? I mean, this is a guy that made Nigeria pay for his N1Billion Naira meals, N500Million Newspapers,N30million cutleries and even sort to renovate his semi-illietrate wife's office for $45Million!

So, yes, go on defending him and calling him the fanciest thing since Sliced Bread, and me, whenever I'm bored, I'll log on to my computer and remind the world (and people like you) the kind of slimeball that is presently in charge of Nigeria dragging her backwards ..... doing no kind of work while thinking development is the propaganda you spread in the mass media.

Katsumoto:

You are naive if you think that foreign investors will invest directly in Nigeria simply on the basis of its bonds being included in an index. You want to ignore
1. No infrastructure
2. Corruption
3. No education
4. Unstable political structure
5. Risks to Safety and security of life in most parts of Nigeria

You think foreign investors have bucket loads of money to waste? When Nigeria starts to invest wisely in infrastructure, education and becomes a mature nation, then investors may flood in.

At this point, I am no longer interested in discussing this issue with you. We were trashing issues but just to make your point, you resort to name calling.

The way you also make one point, then turn around and make another point that contradict your original point makes me believe that we will end up doing circles anyway. Oh and the fact that you do not even know that the Federal Government of Nigeria has Naira denominated bonds that are very liquid in a secondary market in Nigeria means you know next to nothing about the Nigerian financial markets.

Have a great day, sir!

Isale_eko:

At this point, I am no longer interested in discussing this issue with you. We were trashing issues but just to make your point, you resort to name calling.

The way you also make one point, then turn around and make another point that contradict your original point makes me believe that we will end up doing circles anyway. Oh and the fact that you do not even know that the Federal Government of Nigeria has Naira denominated bonds that are very liquid in a secondary market in Nigeria means you know next to nothing about the Nigerian financial markets.

Have a great day, sir!

Stating that you are naive is not an insult nor is it name-calling. However, if you believe it is, I apologize.

Katsumoto:

Stating that you are naive is not an insult nor is it name-calling. However, if you believe it is, I apologize.

Apology accepted.