Market capitalization of the Nigerian bonds have increased from 3.74 trillion naira in 2011 to 5.82 trillion naira at the close of 2012, representing a 55.61% growth, according to the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema.
“This figure is likely to grow even further because of the nation’s dire need for new and revamped infrastructure,” Mr. Onyema told capital market operators, dealing houses, investors and shareholders on Tuesday at a workshop on Retail Bond Trading and Fixed income Market Making.
Bond is a debt security (loan) issued by a government, government agency, or a corporation. It is basically an IOU issued by one party to another
The amount of income a bond generates each year is fixed and will not change for any reason.
Three types of Bonds – Federal Government (FGN), State/Local Government and Corporate – are the most common on the Exchange.
While the current Bonds Capitalization figure is seen by market operators as remarkable, the Nigerian Bond market largely remains a playing field for institutional investors and high net worth Individual, with little room for low fixed income earners to participate.
Onyema said in order to broaden and deepen the Bonds market, the exchange in a few days will introduce the Retail Bonds Trading for fixed income earners.
He said the workshop was one of various avenues to acquaint all stakeholders with the structure and processes of the Retail Bond Market ahead of its official launch on Friday.
Two weeks ago, the NSE announced the names of six selected Fixed Income Market Makers (FIMMs) as a major step towards making fixed income securities accessible to the investing public.
A capital market analyst, Segun George in his presentation described the Nigerian Bonds market as one of the fastest growing in sub-Saharan Africa.
Government Bonds were the first securities that traded on the NSE in 1961 and since then Bonds have continued to play a key role on the floor of the exchange, for more than two decades until the Federal Government pulled out of Bond Issuance in 1987.