Trainees at the launch of Module B Welders training programme in Port Harcourt, last Wednesday.

Managing Director, Cowry Asset Management Ltd, Mr Johnson Chukwu, says the dominance and high yield rates of Federal Government’s bonds have crowded out sub-national bonds from the nation’s bond market.
Sub-national bonds are bonds floated by the state, local governments (or municipal councils) and corporate organisations.
He said that the continued dominance of the market by Federal Government’s bonds had made it difficult for other tiers of government to raise funds to develop their infrastructure.
Chukwu said that this had also made it difficult for the other two-tiers of government to bridge their budgets deficits.
Chukwu made the assertion at the quarterly investment forum organise by the Capital Market Correspondents Association in Lagos, recently.
He called for more collaboration among stakeholders on the issuance of bonds for sustainable development.
According to the Cowry Asset Management boss, the Federal Government floated bonds worth N898.34 billion in 2013.
The worth of the sub-national bonds and corporate bonds during the period stood at N124.5 billion and N23 billion, respectively.
Chukwu, who spoke on “Investment Instruments in Nigerian Capital Market, Risks and Benefits”, said that high cost of funds and poor ratings of companies were the major challenges facing issuance of debt instruments.
He said that the uninformed retail investors, undeveloped data bank and regulated fund managers were also acting as limitations to debt instruments in the country.
“Fund managers and institutional investors constitute the largest group of investors in debt instruments in Nigeria and globally.
“But regulation, by way of limiting the amount of investments in various asset classes affects development of debt instruments,” he said.
Chukwu attributed the downward trend in the equities market to continued tightening of banking system liquidity, high cost of funds and “election fever”.
He said that improvement in alternative market economies and declining external reserves had led to exit of foreign portfolio investors.
“The external reserves remains a cardinal barometer for assessing the financial risk of an economy,” Chukwu said.
He said that some other factors affecting the market growth were the continued protection of the naira, decline in crude oil production and exit of foreign investors.