J.P. Morgan has included Nigerian government bonds in its newly launched Government Bond Index–Emerging Markets Edge (GBI-EM Edge), bringing the country’s local-currency debt back into a major global bond benchmark after 11 years.
Nigeria has been assigned a 7.4 per cent weighting in the index, which tracks local-currency government bonds across 26 emerging and frontier markets.
The inclusion covers 16 eligible Nigerian government bonds with a combined value of about $17.47 billion. Nigeria’s weighting is close to the index’s maximum country allocation of 8 per cent, placing it among the larger components of the benchmark.
J.P. Morgan’s new index tracks approximately $328 billion in government debt across 425 securities, 26 markets and 24 currencies.
The development marks Nigeria’s return to a J.P. Morgan bond-index universe after the country was removed from the bank’s main Government Bond Index–Emerging Markets in 2015, amid concerns at the time over currency liquidity and market accessibility.
The inclusion could increase the visibility of Nigerian naira-denominated government bonds among international investors and potentially support greater foreign participation in the domestic debt market.
However, inclusion in the index does not automatically mean that $17.47 billion in foreign investment will flow into Nigeria. Actual investment will depend on factors including investor mandates, market conditions, currency risks and Nigeria’s economic outlook.
The development comes as Nigeria continues efforts to deepen its domestic capital market and attract foreign portfolio investment.
