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Experts differ on gains of including Nigeria’s bonds in Barclays

Some financial experts have expressed divergent views on the likely effect of the inclusion of Nigeria’s sovereign bonds in the emerging markets index of Barclays Bank, London.

They expressed their views in separate interviews with the News Agency of Nigeria (NAN) in Lagos on Thursday. While some said the inclusion will boost activities in government securities, others advised the regulators to monitor the quality of capital inflow that would arise from the inclusion in the index.

Mr. Henry Boyo, an economist with Abel & Sell Ltd., said that the government needed to strengthen its    investment policies to monitor the quality of investments that enter the country. According to Boyo,  Nigeria is searching for investments that smust be of certain quality and not funds that will come in and go out anytime.

”If the investments coming into Nigeria are speculative cash flows that can be off-loaded at will, they will create problems for the economy,” Boyo said. He said that if returns on government bonds were at double digit, they should be reviewed in line with others with single digit.

Boyo said that the spate of insecurity in the country should be addressed urgently to avoid panic decisions by investors. Mr Nicholas Nyamali, the Managing Director of Investment One Financial Services Ltd, disagreed that the returns on the bonds should be single digit.

According to Nyamali, a double-digit yield environment will attract offshore investments into the bonds market. He said that the inclusion was a vote of confidence on the economy. “The inclusion is a strong reflection of the improvement in the domestic bonds market over the years and a vote of confidence in Nigeria’s economic fundamentals,” Nyamali said.

He, however, said that dominance of foreign investors would make the local market susceptible to volatility of the global financial market.

Mr David Adonri, the Chief Executive Officer, Lambeth Trust & Investment Company Ltd., said that the inclusion of Nigeria would facilitate macroeconomic stability.

The Barclays Bank on April 1 announced that it had included the Nigeria’s sovereign bonds in its emerging market index. JPMorgan of London had also included Nigerian bonds in its emerging-market bond index series since October.


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