The
Fixed Income Securities Market
The Nigerian fixed income securities market is fast developing. Considered as a
veritable alternative to equity investments, its popularity and attraction stem
from its low risk advantage and the predictability of earnings. The instruments
traded include government debt instruments and debt securities of blue chip
corporates. It has a number of diverse institutions participating in it.
Moreover, the range of instruments that are issued and traded is quite
comprehensive and there is ready liquidity in all instruments issued by the
government and short-term securities issued by companies e.g. Commercial
Paper. The most popular among instruments issued by the government are
Treasury Bills of the Federal Government and the recently introduced Central
Bank of Nigeria Certificates. An interesting development following the
inception of the current civilian administration is the issuance of Reyenue
(Development) Bonds by state governments. Recent issues in the market are as
follows
-
The Edo State
Government Bond of WSOO million (yield 21 %)
-
The Delta State
Government Bond of WS billion (yield 18.33%)
-
The EkitiState
Government Bond ofW4billion (initial yield 24.5%)
-
The Lagos State
Government Bond of W25 billion (initial yield 26.5%) (proposed)
-
The Yobe State
Government Bond of W2.5 billori (proposed).
The finance and banking
sector, smarting from the depression of the mid 1990s and subsequent
liquidation of a number of operators by the Central Bank Nigeria, is now fully
sanitized for active participation in this market. The heavy losses experienced
by investors during the distress period have opened their eyes to the need to
rely on professional fund managers to determine viable investment options in
which to place investors’ funds. The resulting atmosphere is that of
professionally minded operators in healthy competition for prospective
investors who themselves are now wiser.