According to the Standard Bank of Nigeria, a number of factors are hindering the development of a bond market in Nigeria.
They include inadequate knowledge of the product, lack of market focus, infrastructural weaknesses and the absence of relevant skills to maintain a secondary market.
However, says Standard, the re-introduction of Federal Government of Nigeria (FGN) bonds in 2003 has improved liquidity, and bonds issued by the private sector, state, and local governments will add to it.
A spokesman for Standard Bank welcomed the initiative of the government to finance domestic debt with the issuance of bonds, and called it “a compliment to the new pensions reforms” as bonds are a natural investment outlet for these long term funds.