What to know as Nigeria returns to JP Morgan’s frontier bond index after 11yrs
After eleven years of absence, J.P. Morgan has included Nigeria in its new emerging markets index, assigning a 7.4 per cent weighting to the West African nation. The index, which tracks local-currency government bonds across the frontier — also known as the Government Bond Index–Emerging Markets Edge (GBI-EM Edge) — is expected to be launched […]
Nigeria has rejoined J.P. Morgan's frontier bond index after an 11-year hiatus, with the West African nation assigned a 7.4% weight in the new Emerging Markets Index - Emerging Markets Edge (GBI-EM Edge). The index, tracking local-currency government bonds across 26 countries, is set to be launched by the end of September, according to Reuters.
Nigeria's inclusion brings its domestic government securities into the limelight for global fixed-income investors, with its weighting representing roughly $17.47 billion of eligible FGN debt across 16 instruments. The index is expected to have an average nominal yield of about 10.4%, around 440 basis points higher than J.P. Morgan's emerging-market local-currency index.
This move comes months after Nigeria engaged in talks with J.P. Morgan to be reinstated into its government bond index for emerging markets, following its exit from the GBI-EM Global Diversified index in 2015 due to foreign exchange liquidity constraints.
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