Steaming from the successes it recorded in recent bond issuance, the Debt Management Office (DMO) has unveiled plans to extend the 'yield curve' by issuing bonds of up to 15 years.

Doing a recap of the efforts of the agency in the Federal Government's bond issuance last year, DMO in a statement on Wednesday reaffirmed that N592 billion was funded through the market using instruments of various tenors.

The statement issued by the Assistant Director/ Communications Adviser, Joseph Inokotong, stressed that from a non-existent market, about 18 months earlier, the secondary FGN Bond market recorded phenomenal trading transactions of more than 30,000 deals, with a market turnover of over N4.1 trillion, for the period, January to December 2007.

He disclosed, "The Debt Management Office has recorded outstanding results from initiatives it has taken to establish a market for long-term debt financing, which is crucial for the development of the real sectors of the economy. These are sectors, which in the past suffer from investment atrophy.
"This feat can be better appreciated from a peep into the outstanding initiatives taken by the DMO in the FGN Bond Market issuance in 2007. A total of N592 billion was funded through the market using instruments of various tenors."

He recalled that the market started on a relatively bearish note in January 2007 with 78 deals amounting to N33.67 billion, and became very bullish in October, reaching a historic high of 5,090 deals, with a market value of more than N726 billion. The statement read, "This figure dropped marginally to 4466 deals in December 2007, with a value of N501.2 billion, due to the usual lull associated with year-end activities and the close of financial books. As expected, the secondary market transactions, dominated by trades amongst the Primary Dealer Market Markers (PDMM) constituted 78.56 per cent of the total transactions, with a market value of N2.75 trillion.

"On the other hand, trade activities involving the PDMMs and other domestic clients has a market value of N562.5 billion, constituting 16 per cent of the market size, while trade activities involving foreign investors has a market value of N189 billion, representing 5.39 per cent." It continued: "The milestones recorded came as a result of the successful sustenance of monthly bond issuance since July 2005, and the institutionalisation of the PDMMs framework in the FGN bond market in July 2006.
"Since then, the Nigerian bond market has continued to make significant progress in terms of size, depth and prospects. Overall, investors' appetite for Nigeria's sovereign debt instruments is expected to be on the increase, as Nigeria becomes the investment destination among emerging markets."

Quoting the Director-General of DMO, Dr. Abraham Nwankwo, the media aide said, "as part of the strategy for implementing the 7-Point Agenda of President Umaru Musa Yar'Adua, a major milestone which the DMO is networking capital market players and other stakeholders to achieve, is the commencement of the issuance of long-dated corporate bonds by the private sector. This will make available long-term funds, suitable for investment in the real sector of the economy - agriculture, solid minerals, energy, and manufacturing - as well as in infrastructure".

He added: "Through the development of the sovereign bond market, the DMO is already providing the benchmarks and market model on which a veritable corporate bonds' market can be built. In 2008, the DMO plans to extend the yield curve by issuing bonds of up to 15 years. "According to Nwankwo, the achievements recorded in the bond market reflect the positive impact of the sustained reform initiatives of the government: Reforms aimed at achieving a stable macro-economic environment and sustained growth.

"Moreover, these achievements reflect the impact which the character, style and focus of President Musa Yar'Adua's administration is having in building the confidence of investors, local, as well as foreign, in the Nigerian economy."