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Nigeria Sovereign Wealth fund cuts USA’s treasury exposure

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We've traced forfeited assets to 25 locations in Nigeria — FG

By Peter Egwuatu

ECONOMY

The Nigeria Sovereign Investment Authority, NSIA, yesterday, indicated it has cut its United State of America’s treasury (bond) exposure to less than 20 per cent following concern over soaring yields and expensive valuations for some of the world’s largest firms.

The Chief Executive Officer, NSIA, Uche Orji, said the NSIA is pivoting its holdings to other asset classes that will benefit as economies re-open and global travel picks up.

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  “ NSIA’s Stabilization Fund has cut its U.S. Treasury exposure to less than 20 per cent    and may sell more stocks, which make up about 25 per cent of the portfolio.

“I’m very worried about rising interest rates,” Orji said in an interview on Bloomberg TV.

“We were very bullish across most asset classes last year. We’re more cautious now” he added.

The sovereign wealth chief joins a chorus of investors warning about the consequences of the recent spike in U.S. Treasury yields as well as troubling signs that suggest another tech bubble.

Orji said he favours pharmaceutical, aviation and consumer discretionary shares. The NSIA is also closely watching emerging markets, which helped contribute to the fund’s gains last year.

NSIA is planning to raise $900 million to $1 billion of debt to help fund construction of an ammonia plant in southeast Nigeria at the cost of $1.4 billion with partners including OCP Group of Morocco, the CEO said.

“Equity investors will provide the remaining funding. 

You have a 100 per cent off take guarantee, so it’s easy to fund a project like that,” Orji said.

“We are confident that somewhere in the international market and local market we will be able to raise debt” he noted.

It should be noted that NSIA signs landmark agreements with OCP of Morocco, Akwa Ibom State, NNPC, GACN, NCDMB and FEPSAN for development of US$1.4 billion plant to produce Ammonia and Diammonium Phosphate, under its Gas Industrialization Strategy.

  

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