CBN rate hikes lift Nigeria fixed income demand
Nigeria’s aggressive monetary policy tightening drove substantial investor interest in fixed income securities last year, according to Kemi Awodein, president of the Association of Issuing Houses of Nigeria. The central bank raised its benchmark rate eight times, accumulating 875 basis points to reach 27.5 percent by year’s end from an initial 18.75 percent, as policymakers attempted to control inflation through elevated borrowing costs.
The high interest rate environment led to government securities dominating the market, with approximately 12.83 trillion naira in treasury bills and open market operation notes issued compared to just 716.7 billion naira the previous year. This crowded out private sector borrowing, limiting corporate debt issuance primarily to commercial paper instruments. However, bank recapitalization activity accelerated following regulatory announcements, with Access Bank completing its requirements and several other institutions launching capital raises ahead of a regulatory deadline.
The sector body reported improved financial performance, with total income climbing to 123.6 million naira while generating a surplus of 62.9 million naira.
