As of August 2017, the market capitalisation of Nigeria’s domestic bonds market stood at N7.4tn, representing a growth of 11.5 per cent from a year earlier when the figure was estimated at N6.64tn.
Data obtained by our correspondent also showed that the market capitalisation of the debt capital market accounted for 37 per cent of the total worth of the capital market.
By implication, the domestic bonds market contributed 7.11 per cent of the country’s Gross Domestic Product.
Of the N7.4tn capitalisation, the Federal Government of Nigeria bonds were valued at N6.5tn (88 per cent), state government bonds valued at N563.6bn (7.6 per cent), corporate bonds stood at N297.4bn (four per cent) and supra-nationals, N24.95bn (0.3 per cent).
Tenors of instruments on the debt market are usually five, 10 or 20 years, and over the last five years, there have been oversubscription of the FGN bonds, meaning a positive remark on the debt market.
One of the major determinants of a thriving bond investment environment is the suitability of regulation, and this is largely coordinated by the government through its agencies, policies and guidelines in place.
In the country, the primary regulators comprise the Debt Management Office, the Central Bank of Nigeria and the Securities and Exchange Commission.
The DMO coordinates the debt activities and profile of the country, which include debt service forecasts and debt payment.
The DMO also facilitates the listing of newly issued FGN bonds by paying listing fees to the NSE annually.
The CBN acts as the issuing house and a settlement bank for the debt market. The CBN also monitors and ensures the efficiency of the debt capital market by participating in the Bond Market Steering Committee.
The SEC supervises the debt capital market through the NSE and the FMDQ Securities Exchange to ensure orderly and equitable dealings in securities and safeguard the market against unwanted trading activities.
To this end, the Director-General, DMO, Ms. Pat Oniha, underscored the importance of the debt capital market to the country’s overall Economic Recovery and Growth Plan.
According to her, a robust bond market will support the Federal Government’s diversification efforts, as the market is capable of creating new economic opportunities that will further deepen the economy.
The DMO boss also called for greater commitment from the private sector to complement the government’s efforts, especially in the area of infrastructure development.
In the same vein, the Director-General, SEC, Mounir Gwarzo, said Nigeria needed to increase private investment to consolidate on the recent exit from recession, explaining that investment was still less than 15 per cent of the GDP, while consumption was over 75 per cent of the GDP.
He added, “The ERGP also underscores the roles of the private sector in leading the growth that Nigeria desires. The country cannot continue to rely on owners’ capital and short-term funding from commercial banks
“There is the need to access long-term capital from the debt capital market.”