Pension operators invest N3.25tn in FGN Bonds

By 12:19 Sat, 19 Sep 2015 Comments

Mr. Misbahu Yola

About N3.25tn collected from workers by Pension Fund Operators under the Contributory Pension Scheme has been invested in Federal Government of Nigeria Bonds.

The Chairman of the Pension Fund Operators Association of Nigeria, Mr. Misbahu Yola, who spoke to journalists at the end of the body’s forum in Abuja on Thursday, said 65 per cent of the N5tn that had accrued under the CPS had been invested in FGN Bonds.

Yola said the attraction of FGN Bonds to pension fund operators was the safety and security of the debt instrument as it had the backing of the Federal Government, which would do anything possible to remain credit worthy.

He also disclosed that about 12 per cent of the fund had been invested in equities and another 15 per cent in the money market. This means that about N600bn and N750bn had been invested in equities and the money market, respectively.

Yola said, “More than 65 per cent; close to 70 per cent of the industry’s funds are in FGN Bonds and treasury bills. You have another 12 per cent in equities and another 15 per cent in the money market. The bulk of it is in government securities.

“We are investing in the bonds because of the safety of the funds. Where else can we put the money? We buy bonds, we buy treasury bills. They are still safer than putting money in the bank.”

Answering question on the proposed phasing out of the FGN Bonds from the JPMorgan index, Yola said the bonds had been doing well before JPMorgan started listing them, but added that the decision to delist the bonds could lead to lower participation in the country’s bond market by foreign investors.

He said, “The bonds were resuscitated around 2003, JPMorgan came in about 2012. Before JPMorgan came into the country, the business of the bond was already on. The whole idea of having that index is to ensure that foreign investors can have information guidance. It gives them confidence. Foreign investors were here even without the index.

“Removing Nigeria from the index means that foreign investors may not be looking at the index to put their money into the Nigerian debt market. They can still invest by making their own investigation.

“However, foreign participation in the Nigerian bond market had significantly dwindled even before this time for a number of reasons.”



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