FG borrowing from bonds market declines 73.6% to N600bn

The Nigerian financial market has experienced a significant shift as the Federal Government and companies withdraw from the bonds segment of the market, while the equities market has experienced a significant rebound.

The value of government securities listed on the Nigerian Exchange Limited, NGX, fell by 73.6 percent in the first quarter of the year, Q1’22, to N599.7 billion, down from N2.27 trillion in the same period in 2021, Q1’21.

In addition, the value of corporate bond listings fell by 32.4 percent to N28.3 billion in Q2’21, from N41.9 billion in Q2’21.

As a result, the total value of newly listed securities (government securities, equities, and corporate bonds) on the Exchange fell by 33.3 percent in the period under review, to N1.8 trillion from N2.7 trillion in Q1’21.
Meanwhile, equities listed on the NGX increased by 1,901.8% in Q1’22, rising to N1.1 trillion from N54.9 billion in Q1’21.

The massive increase in equities listings amidst a massive decline in government securities also indicates fiscal policy crowding-in, reversing a five-year trend of crowding-out in the Nigerian capital market’s public-private sector interplay.he 
Crowding-out occurs when large fund raises by governments in the capital market through bond issues eventually squeeze private sector fund raises in the same market. The inverse, known as crowding-in, has now been documented.