In her opening remarks at a webinar organized by the FMDA Bond Workgroup, FMDA President, Mrs. Adetoun Dosunmu, said the depth of any market is dependent on the quality and size of its product offerings.
She said the webinar, with theme: “Growing a Liquid Market for Corporate Bonds” organized by the Bonds Workgroup of the Association and sponsored by the FMDQ Group.
Dosunmu said the ability to meet the diverse needs of each market participant and/or stakeholder, creating/engineering products and services that allow businesses and even the government to function in an ever-changing world amongst many other needs cannot be over-emphasised.
To achieve these, Dosunmu advised that financial markets participants/stakeholders should be a part of the policy formulation and periodic review process. While providing insights on the development of the domestic bond market as a key priority for a successful financial sector development agenda, Chief Executive Officer, FMDQ Group, Mr. Bola Onadele.
Koko, noted that this year, the primary market for corporate bonds in Nigeria has recorded strong and commendable growth on the back of increasing awareness amongst corporates to match long-term financing requirements with long-term funds.
He explained that with several areas of the economy, such as infrastructure, education and health care sectors, requiring funding to promote development, the capital market holds the potential to meet these needs, and the Nigerian Government has a key role to play in providing the enabling environment, through key policies that would support financial market infrastructure such as FMDQ Group, as well as encourage corporates, government parastatals and others, to explore the debt capital markets for their funding needs.
The keynote speaker, Director-General, Debt Management Office, Ms Patience Oniha, said the return of Federal Government of Nigeria to the bond market after an absence of 30 years, in 2003, when the DMO resumed the issuance of Federal Government of Nigeria (FGN) Bonds market the beginning of the creation of a very active and liquid Nigerian bond market.
She said the DMO is pleased to have pioneered this development and remains grateful for the active support and participation of key stakeholders, one of which is the FMDA.
Oniha, who spoke on the theme: “Growing a Liquid Market for Corporate Bonds” said the liquid market was boosted by transparency in the FGN Bond Auction process through the issuance of a quarterly issuance calendar, monthly offer circular and publication of the auction results.
According to her, the licensing of Primary Dealer Makers by the DMO to actively trade the Bonds and creation of benchmark FGN Bonds for standard tenors, among others were also supportive of the ongoing bond market liquidity.
Also speaking, Group Managing Director /CEO Access Bank Plc, Herbert Wigwe, who was represented by Executive Director, Retail Banking, Victor Etuokwu, said that by lowering the Monetary Policy Rate (MPR), widening the discount window and lowering the official savings rate, Monetary Policy is clearly nudging domestic savers to seek Naira-denominated risk assets.
Wigwe, however, insisted that the corporate issuer segment of the market is beginning to witness significant uptick due to initiatives such as the Short Term Bond issuance and the recently launched Private Company Notes Market windows of the FMDQ.
He aded that the initiatives have provided issuers with a variety of options and structures that have improved time-to-market and therefore access to much needed capital.
He said that Corporate bonds are less costly than receiving a bank loan, including deb service, fees and expenses, longer term financing when compared to bank loans to meet their needs or to have a better asset/liability tenor match and tax waiver putting corporate bonds on equal status as government bonds, for issuers and investors.