Kastonkastroll:
To hell with JP Morgan. must we be there slaves? We won't devalue our currency again not for whatever reason(s).

I think buhari intentionally didn't form his cabinet so that Nigeria will no longer be held back(economically) by this imperialists bond index markets.

Is virtually enough time we drastically reduce importation and increase exportation. We also need to start using what we produce locally. Funny how this western markets will want to flood our local markets with their products but won't like our products in their markets.

Kastonkastroll:
To hell with JP Morgan. must we be there slaves? We won't devalue our currency again not for whatever reason(s).

I think buhari intentionally didn't form his cabinet so that Nigeria will no longer be held back(economically) by this imperialists bond index markets.

Is virtually enough time we drastically reduce importation and increase exportation. We also need to start using what we produce locally. Funny how this western markets will want to flood our local markets with their products but won't like our products in their markets.

woodcook:
Please if you dont mind can you explain to me how this is in Nigeria favors. Kindly explain its positive effect on our economy. Thanks

Kastonkastroll:
To hell with JP Morgan. must we be there slaves? We won't devalue our currency again not for whatever reason(s).
I think buhari intentionally didn't form his cabinet so that Nigeria will no longer be held back(economically) by this imperialists bond index markets.
Is virtually enough time we drastically reduce importation and increase exportation. We also need to start using what we produce locally. Funny how this western markets will want to flood our local markets with their products but won't like our products in their markets.

Kx:
A lay man remarks on the JP Morgan Bond stuff.

Has all the govt borrowing and inflow of capital from the west thru bonds:
a. Improved our standard of living?
b. Triggered value adding economic activities; manufacturing; output of finished goods from resident input raw materials?
c. Staling continued inverse relationship of unemployment, poverty and lack of jobs vis a vis increased govt borrowing, then rising price of crude per barrel and massive govt revenues from increased crude oil sales?

If the answer to the posers above is NO,
Perhaps its high time we tried some other options other the the bretton woods endorsed time tested failed ones.

"One’s best success comes after their greatest disappointments."Henry Ward Beecher

ibedun:


See your answer below



Whatever you do please ignore the empty headed ranting of idiats like WombRaiders

laurel03:
den why u wan give jonathan another four year when he failed for 6years? But PMB jst use 100days.... U can port to Togo

WombRaiders:


Another fool.

When your Buhari went to visit Obama in Washington you fools took it as achievement.

When your illiterate leader read a script in Chatam House , London you fools celebrated it.

When your boko goat attended G7 meeting in west Germany, you praised it as good times to come.

You see how no single functioning brain cell in that your empty Koran carrying skull case is working properly.

laurel03:
den why u wan give jonathan another four year when he failed for 6years? But PMB jst use 100days.... U can port to Togo

WombRaiders:


Why are you APC goats now sounding anti west when you fools celebrated your nomadic president's invitation to the white house, G7 meeting and Chatam house as achievements ?

WombRaiders:


Fool keep decieving yourself.

By the time hunger begin blow you, sense go finally return.

ibedun:


Jonadaftian please separate POLITICS from ECONOMICS.

If I am right your emotions and strongheadedness suggests to me you are from a certain section of the country - stop, think before you act. That could have saved 3 million souls if you get my drift.

WombRaiders:


Fool. I stated that the naira crashed immediately Sanusi was found out to be a liar and not the stock market.

Go and read my post again and do it slow.
Autistic Phuck head.

WombRaiders:


Then forever stop attributing the increase in power supply to this administration.

It was GEJ that improved our power generation and not your boko president.

Have you even bothered to ask which infrastructural project this administration has duly rolled out?

Even the current budget duly passed by the last Senate is not being adhered to by your useless president.

So where is all the money going to?

You will be suprised at the scale of corruption currently ongoing under your saint Buhari and all these his Yeye baseless accusations on the past administration is to let you fools not expect much from him and divert all your frustrations on the past administration.

Fools

laurel03:
den why u wan give jonathan another four year when he failed for 6years? But PMB jst use 100days.... U can port to Togo

Kx:


You can do better defending your view without insulting people and labeling every other persons APC goats.

You are better than this i suppose.

Life is not all about APC PDP.

citizenisb:
http://nairametrics.com/jp-morgan-index-list-of-possible-implications-when-nigeria-is-evetually-kicked-out/


The current Buhari Government has been taking credit for some of the policy initiatives carried out by Goodluck Jonathan Government such as stable power, the Treasury Single Account, tax initiatives, war on terror, renewal of strong diplomatic ties with the US etc. The Buhari Government is also not relenting in calling out the past government for its bad policies and alleged corruption. This development will now give critics of the current government, the opposition party and sympathisers of the past government enough armory to blame the current government.

They will surely blame the Buhari government for not acting swiftly enough to stop the decision of JP Morgan considering that it issued the threat about 9 months ago. They will also say it is because of the slow mode of operation of the current government (which for example has not announced a cabinet more than 100 days after being in office) that has made the CBN Governor act alone thus portraying the country as one without an economic direction. This will cost the president a lot of political capital as even his supporters must now be jittery.

Bond Yields

When Nigeria borrows money by selling bonds they pay investors based on the on prevailing bond yields. For example, a unit of a bond priced at N1000 may have been originally sold at an interest rate of 10%, that is N100 per N1000. With Nigerian thrown out of the index holders of that bond could dump it and sell for lower than N1000 per paper just to exit. If the average price drops to N800 due to high volume of sellers then that interest rate of 10% is now 12.5%, that is N100 dividend by N800.
This means the next time the Nigerian Government goes out to borrow it will no longer attract a 10% yield but will now borrow from investors at a yield of 12.5% or even more. This will cost the government more money in servicing interest thus taking money it could have used for capital projects for debt servicing.

Lack of foreign demand

By taking Nigeria off the index, there will be little or no demand for our bonds from foreign investors. Already, since JPM threatened to yank Nigerian off back in January, foreign holding of our bonds has dropped from a peak of $11 billion in 2013 to $3 billion today. It is therefore likely that this may even shrink further thus affecting the demand for our debts. A lack of demand for our debts means yields may even get higher as fewer investors will now sought for our bonds

Gain for other emerging markets

With Nigeria out of the scene, other emerging markets in Africa like Ghana, Kenya and even South Africa could now be more attractive to investors. They will simply now move their funds to competing countries leaving Nigeria in its wake. Since investors like to follow the money, it is also likely that other forms of investments may elude Nigeria because of this singular move.

Prestige and Clout

With the above happening, Nigeria will lose its prestige as not just the largest economy in Africa but the economy attracting the most foreign investments. This will be damaging to an economy that has been thumping itself as the destination to be for foreign investors.

Corporate Bonds

Local companies and banks also borrow money from foreign investors by selling foreign denominated bonds and also Naira bonds. Now that the Federal Government is likely to see their borrowing cost go up due to this development, it is likely that banks and other corporates seeking to borrow may have to pay more in interest as well. Some companies may not even have the courage to borrow with bonds again due to high lending rates and may result in some companies gets starved of funds so much that they may start to incur losses or even fold up. For those that have even borrowed refinancing such loans will now be expensive as yields have already gone up.

Higher lending rates

For the banks that are lucky enough to borrow, they will have to pass on that cost to someone else. Small businesses which rely on banks for small loans such as overdrafts, local purchase orders, letters of credit etc. may also see their borrowing rates rise even higher. For individuals with consumer loans they may also be expecting a letter from banks telling them that their loan rates have gone up.

Foreign Currency Cost

It is also likely that foreign currencies will cost more to use due to this action. Holiday makers or business travelers who use their cards abroad for foreign denominated transactions may also see themselves paying more whenever they spend their naira debit cards. Since some banks also channels some of their foreign borrowings in the forex market it is likely that they will charge end users more to recover the higher cost of borrowing.

Shallow market

With the exit of most foreign investors the long term plan of the Debt Management Office of ensuring that our bond market is deep is now in jeopardy. With little demand, it is unlikely that the government and other private companies seeking foreign currency loans will use the bond market as a possible source. This will make the market shallow and unattractive and could even throw some companies out of business. For example, Fund Sourcing Companies, Legal Advisers and other consultants may witness a huge reduction in deals thus affecting their revenues.

Ripple Effect

The Nigerian stock market which has seen some bullish trends in recent days may also be negatively impacted. With this announcement it is likely that this may hurt the confidence of foreign investors which make up about 45 to 50% of transactions in the Nigerian Stock Exchange. If they decide to exit the market because of this then the market may just be primed for another long bearish run.

Devaluation

If this situation is not handled properly it may also trigger another massive devaluation. This could be caused by foreign investors who have had enough and will now use this decision by JPM as a reason to pull out their funds. Pulling out their funds creates demand pressure on forex and may result in a devaluation of some sort.

ibedun:


See your answer below



Whatever you do please ignore the empty headed ranting of idiats like WombRaiders

Kastonkastroll:
that man called wombraiders is a complete nincompoop and a first class nuisance on nairaland.

udemzyudex:
see the way you dey reason... Go and compare Jonathan 100days in office and PMB own and see the difference...


I'm a Nigerian, you can port if you want to...

#proudlyNigerian.. That one no mean say of something bad, make i no talk..

Billygee2u:

how can a country move forward when a dictator is a president and ministers?

laurel03:
I'm a Nigerian, you can port if you want to... I can see d result of jonathan100 days in office when dey finished all 9ja money... When corruption nearly killed 9ja... Either u like it or not PMB is ur president till 2019... Even jonathan accept by himself self dt he failed 9ja....

WombRaiders:


You still dey shout change?

That broom juju strong for your side.