FGN Savings Bonds

•Q2’22 signals trend reversal

By Peter Egwuatu

The value of listed Federal Government of Nigeria, FGN, Bonds on the Nigerian Exchange Limited, NGX, in the first half of the year, H1’22, declined by 52.5    per cent to N1.6 trillion from N3.4 trillion in the corresponding period of 2021, HI’21.

Meanwhile, Vanguard’s findings from the data in the NGX shows that in Q2’22 the value of listed FGN Bonds on the Exchange stood at N1.025 trillion, about 54.8 percent lower than N2.266 trillion recorded in Q2’21.

But the Q2’22 figure shows a massive 70.9 percent jump higher than the N599.696 billion recorded in Q1’22, signifying that decline may be reversing going forward.

Reacting to this development, analyst and Executive Vice Chairman, HighCap Securities Limited, Mr David Adonri, said: “The reduction of FGN Bonds listing could be that government borrowed less in the domestic market and its implication is that it could affect liquidity in the secondary market.

Continuing, he said: “Both externally and internally, government has been borrowing a lot and is still taking more debt. This is increasing the risk of sovereign default and economic nightmares.

In his own comment, Investment Banker and Stockbroker, Mr Tajudeen Olayinka, said: “If there was increase in debt listings in the market it brings about increased liquidity and trading activities in the market, but the drop in H1’22 could be largely as a result of higher yields in other competing instruments.   

“The drop in the FGN Bond listing could also be that there was less borrowing by government in the primary market so not much to offer for listing in the secondary market.”

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