JP Morgan places Nigeria bonds on negative watch
* Nigeria central bank disagrees with move, say market liquid
* Nigeria accounts for 1.8 pct of emerging bond index (Adds comments from central bank governor,
forex dealer)
By Chijioke Ohuocha and Tim Cocks
LAGOS, Jan 16 (Reuters) - JP Morgan said on Friday it would assess Nigeria's suitability to remain in
a key emerging currency bond index it manages because of a lack of liquidity in the African country's
foreign exchange and bond markets.
The bank, which runs the most commonly used emerging debt indexes, said it had placed Nigeria on
a negative index watch and would assess its place on the Government Bond Index (GBI-EM) over the
next three to five months.
Removal from the index would force funds tracking it to sell Nigerian bonds from their portfolios,
potentially resulting in significant capital outflows. This in turn would raise borrowing costs for Africa's
largest economy, although analysts said they did not expect JP Morgan to take such a step.
Nigeria's central bank on Friday denied there was any shortage of liquidity in the currency market,
however.
JP Morgan added Nigeria to the widely followed index in 2012, when liquidity was improving, making it
only the second African country after South Africa to be included. It added Nigeria's 2014, 2019, 2022
and 2024 bonds, which make up 1.8 percent of the GBI-EM Global Diversified index.
Investors have $216 billion benchmarked to the GBI-EM, the most popular emerging local debt index.
But the bank said the current liquidity issues made it hard for foreign investors to replicate it.
"If we are unable to verify sufficient liquidity in Nigeria's spot FX and local treasury bond market ... it
will trigger a review ... for removal," JP Morgan said.
"Conversely, if liquidity improves and investors are able to transact with minimal hurdles, Nigeria will
be removed from index watch negative."
The forex and bond markets have come under pressure after the price of oil, Nigeria's main export,
plunged. In response, the central bank devalued the naira by 8 percent last year and tightened trading
rules to curb speculation.
A Nigerian currency dealer said daily forex trading had fallen to under $100 million daily from around
$500 million four weeks ago, which he blamed on the central bank rules.
David Spegel, head of emerging debt at BNP Paribas, said: "I would be very surprised if Nigeria was
ejected from the index entirely given the size of the economy and potential for future capital raising in
the debt and equity markets there.
"Eventually the whole oil risk issue will be priced into the market and flows of capital and investment
will return to Nigeria," Spegel said. (Additional reporting by Chris Vellacott in London; Editing by Mark
Trevelyan)

http://mobile.reuters.com/article/idUSL6N0UV2DH20150116?irpc=932

Can we go and beg Sanusi or Soludo to come back?

Mynd44:
Can we go and beg Sanusi or Soludo to come back?

I doubt if Sanusi will leave his throne to attend to minions like us.
As for Soludo, no one knows his whereabout.
@Post. Just when I decide to take an interest in bonds this year... I see this.

demelza:
I doubt if Sanusi will leave his throne to attend to minions like us.
As for Soludo, no one knows his whereabout.
@Post. Just when I decide to take an interest in bonds this year... I see this.

bad news for you mate

This is another damning verdict on the state of our economy.

We 're currently facing the consequences of lack of economical diversification.

It's not a GEJ thing but all past leaders including him.

Even APC is still planning to make same mistake... And the mistake is a single commodity economy called oil.

Since oil price is down the d backbone of the naira went down too.

Dats why u see d devastating effects on the naira d dollar exchange rate.

bad news

a whole lot of market economics piling up against us all at once within just six months. guess its time for our geniuses to show their strengths for a bigger turnaround for the better.