₦airaland Forum

masseratti:
which banking sector boomed under Gej era? Are you aware this JP Morgan delisting warning came when Gej was in power? Gej was there for five and half years with Noi,that means they must have done something wrong in that period for JP Morgan to sound the warning in January, 100 days of PMB won't make them change their mind or clean the mess.

7lives:
@Bolded, this is a big lie, Nigeria is Africa's largest investors haven.
Let them go to blazes, JP Morgan my jack ass all that Nigeria needed is a transparent leadership, enabling environment, a highly focused citizenry and we'll be home and dry.
With all the JP Morgan listing, how many European economy have they revived, i would rather we look towards Asia while we encourage our people to go into JV with other foreign nationals.
We don hear say na China be baba now, say most American economic reports are doctored, JP Morgan ko, George Soros ni.
Shebi Racists have not been able to impose their useless IMF AND World bank inhuman economic policies on Nigeria, we are no longer in the 90s oju ti la eye don open.
Baba abeg downplay this nonsense don't pay attention to these racists, our hands have already made strong by the hands of the almighty, they can't stop this match to progress.
In the end, the Asians will be having the ball while the racist watch them play, the era of scramble and partition is loooooonng over, now it is first come first serve.

VeeBabs:
Friend, investment is not by sentiments or friendship or patriotism. If a place (country) is favourable for investments, people (investors) will find their way to you. That's what investment advisory companies exist for. And they are constantly keeping tabs on every country's fiscal, political, monetary, economic and environmental situation and decisions, weighing their effects on each country's investment climate according to a highly sophisticated algorithm.

They "sell" their findings (highly educated predictions) to clients the world over (e.g. hedge funds, sovereign wealth funds, private investors etc etc) who look up to them for timely information.

For example, if you, as a Nigerian, had N1 billion naira deposit balance in a particular Nigerian bank, and then you hear (somehow) that that bank will collapse in a month's time, what would you do? Keep your money there to "help them get through the crisis" or HURRY LIKE CRAZY to get your account manager to suck out every last kobo you have there. Now imagine people (foreigners) who have BILLIONS (in dollars) invested.

Nigeria's delisting from the JP Morgan index has its consequencies. Global financial/investment advisory companies/consultants must have alerted all their investor-clients accordingly on the right steps to take following this anticipated delisting (announced since January 2015). What do you think ratings agencies like Standard & Poors, Fitch and Moody's are doing? How about consulting firms like McKinsey, Accenture and the myriad heavy-weights in the financial services sector? They are all constantly monitoring the pulse and blood pressure of each and every country in the world (tracking their political/fiscal/monetary/economic decisions), and using their information to advise their investor-clients regularly!

If your village is the best place on earth to invest, Warren Buffet will waste no time in channelling billions of dollars in that direction. Investment is not by "those who love Nigeria will stay, those who don't love Nigeria will leave". Investors are not begging you. They never were. If you crash your stock market, or evaporate investor confidence somehow, get ready to stand by and watch billions of dollars check out of your economy on per second billing.

Welcome to the 21st Century.

My 2 kobo.

omonnakoda:
That is very naive and simplistic thinking. Why is JP Mogan right in their opinion? What is their motivation? Is JP morgan neutral?

SeverusSnape:
Buhari is a curse.

masseratti:
JP Morgan gives economic indicators and they do that based on figure Nigerian government gives out,Nigeria failed their transparency test, so you won't blame them.and yes they r neutral it's not about opinion.

atlwireles:
What It Means For Nigeria To Be Kicked Out Of The JP Morgan EM Bond Index

http://nairametrics.com/jp-morgan-index-list-of-possible-implications-when-nigeria-is-evetually-kicked-out

Political Capital
The current Buhari Government has been taking credit for some of the policy initiatives carried out by Goodluck Jonathan Government such as stable power, the Treasury Single Account, tax initiatives, war on terror, renewal of strong diplomatic ties with the US etc. The Buhari Government is also not relenting in calling out the past government for its bad policies and alleged corruption. This development will now give critics of the current government, the opposition party and sympathisers of the past government enough armory to blame the current government. They will surely blame the Buhari government for not acting swiftly enough to stop the decision of JP Morgan considering that it issued the threat about 9 months ago. They will also say it is because of the slow mode of operation of the current government (which for example has not announced a cabinet more than 100 days after being in office) that has made the CBN Governor act alone thus portraying the country as one without an economic direction. This will cost the president a lot of political capital as even his supporters must now be jittery.
Bond Yields

When Nigeria borrows money by selling bonds they pay investors based on the on prevailing bond yields. For example, a unit of a bond priced at N1000 may have been originally sold at an interest rate of 10%, that is N100 per N1000. With Nigerian thrown out of the index holders of that bond could dump it and sell for lower than N1000 per paper just to exit. If the average price drops to N800 due to high volume of sellers then that interest rate of 10% is now 12.5%, that is N100 dividend by N800.
This means the next time the Nigerian Government goes out to borrow it will no longer attract a 10% yield but will now borrow from investors at a yield of 12.5% or even more. This will cost the government more money in servicing interest thus taking money it could have used for capital projects for debt servicing.

Lack of foreign demand
By taking Nigeria off the index, there will be little or no demand for our bonds from foreign investors. Already, since JPM threatened to yank Nigerian off back in January, foreign holding of our bonds has dropped from a peak of $11 billion in 2013 to $3 billion today. It is therefore likely that this may even shrink further thus affecting the demand for our debts. A lack of demand for our debts means yields may even get higher as fewer investors will now sought for our bonds
Gain for other emerging markets
With Nigeria out of the scene, other emerging markets in Africa like Ghana, Kenya and even South Africa could now be more attractive to investors. They will simply now move their funds to competing countries leaving Nigeria in its wake. Since investors like to follow the money, it is also likely that other forms of investments may elude Nigeria because of this singular move.
Prestige and Clout
With the above happening, Nigeria will lose its prestige as not just the largest economy in Africa but the economy attracting the most foreign investments. This will be damaging to an economy that has been thumping itself as the destination to be for foreign investors.

Corporate Bonds

Local companies and banks also borrow money from foreign investors by selling foreign denominated bonds and also Naira bonds. Now that the Federal Government is likely to see their borrowing cost go up due to this development, it is likely that banks and other corporates seeking to borrow may have to pay more in interest as well. Some companies may not even have the courage to borrow with bonds again due to high lending rates and may result in some companies gets starved of funds so much that they may start to incur losses or even fold up. For those that have even borrowed refinancing such loans will now be expensive as yields have already gone up.

Higher lending rates Well done that is sweet of you to donate knowledge to brainless individuals.
For the banks that are lucky enough to borrow, they will have to pass on that cost to someone else. Small businesses which rely on banks for small loans such as overdrafts, local purchase orders, letters of credit etc. may also see their borrowing rates rise even higher. For individuals with consumer loans they may also be expecting a letter from banks telling them that their loan rates have gone up.

Foreign Currency Cost
It is also likely that foreign currencies will cost more to use due to this action. Holiday makers or business travelers who use their cards abroad for foreign denominated transactions may also see themselves paying more whenever they spend their naira debit cards. Since some banks also channels some of their foreign borrowings in the forex market it is likely that they will charge end users more to recover the higher cost of borrowing.

Shallow market
With the exit of most foreign investors the long term plan of the Debt Management Office of ensuring that our bond market is deep is now in jeopardy. With little demand, it is unlikely that the government and other private companies seeking foreign currency loans will use the bond market as a possible source. This will make the market shallow and unattractive and could even throw some companies out of business. For example, Fund Sourcing Companies, Legal Advisers and other consultants may witness a huge reduction in deals thus affecting their revenues.

Ripple Effect
The Nigerian stock market which has seen some bullish trends in recent days may also be negatively impacted. With this announcement it is likely that this may hurt the confidence of foreign investors which make up about 45 to 50% of transactions in the Nigerian Stock Exchange. If they decide to exit the market because of this then the market may just be primed for another long bearish run.

Devaluation
If this situation is not handled properly it may also trigger another massive devaluation. This could be caused by foreign investors who have had enough and will now use this decision by JPM as a reason to pull out their funds. Pulling out their funds creates demand pressure on forex and may result in a devaluation of some sort.

masseratti:
which banking sector boomed under Gej era? Are you aware this JP Morgan delisting warning came when Gej was in power? Gej was there for five and half years with Noi,that means they must have done something wrong in that period for JP Morgan to sound the warning in January, 100 days of PMB won't make them change their mind or clean the mess.

Kastonkastroll:
Guy(citizenisb) abeg stop disturbing us with this "JP Morgan delisting Nigeria from its bond index market" nonsense.. It not like we were the ones that begged them to list us in their market in the first place.

You don't expect our CBN to destroy our economy and put Nigerians in a very sticky situation just because we want to satisfy some bloody imperialist market in the west....


mtcheewwww

stickncarrot:
BUHARI and his CHANGE mantra have stayed there for 103 days. In these days , he was suppose to have done something to maintain and sustain the economy but his tribal bigot didnt allow him to.


What is wrong with him working with GEJ's economic team for this period of 103 days or more till he gets his team? Buhari lacks economic direction which we have complained, foreign media have done the same and our media and his party is still giving him hornymoon.


Did you ask " which bank was booming?" How old are you in the first place? I dont think i have time to educate bigots. You can Google for yourself. Find out Nigerian bank that gained global recognition and when it did so.


What i can tell you is that Buhari is a failure and no one can defend this an inch. Who will account for all the economic blunder that BUHARI has committed? how long must this continue? Where will Nigeria be if this is allowed for six months? Braze up for 1960s

omonnakoda:
What opinion did JP Morgan give about Greece??
Why was JP Morgan fined £572 million just 2 years ago for the so called white trading scandal?

For the uninformed and brainwashed Colomentalized JP Morgan is holier than Jesus. Those who are not lazy who make an effort to know what they are talking about before opening their empty heads to public scrutiny know that JP Morgan is a discredited brand
Just Google the word scandal and JP Morgan. We do not have to take their bullshitt

atlwireles:
What It Means For Nigeria To Be Kicked Out Of The JP Morgan EM Bond Index

http://nairametrics.com/jp-morgan-index-list-of-possible-implications-when-nigeria-is-evetually-kicked-out

Political Capital
The current Buhari Government has been taking credit for some of the policy initiatives carried out by Goodluck Jonathan Government such as stable power, the Treasury Single Account, tax initiatives, war on terror, renewal of strong diplomatic ties with the US etc. The Buhari Government is also not relenting in calling out the past government for its bad policies and alleged corruption. This development will now give critics of the current government, the opposition party and sympathisers of the past government enough armory to blame the current government. They will surely blame the Buhari government for not acting swiftly enough to stop the decision of JP Morgan considering that it issued the threat about 9 months ago. They will also say it is because of the slow mode of operation of the current government (which for example has not announced a cabinet more than 100 days after being in office) that has made the CBN Governor act alone thus portraying the country as one without an economic direction. This will cost the president a lot of political capital as even his supporters must now be jittery.
Bond Yields

When Nigeria borrows money by selling bonds they pay investors based on the on prevailing bond yields. For example, a unit of a bond priced at N1000 may have been originally sold at an interest rate of 10%, that is N100 per N1000. With Nigerian thrown out of the index holders of that bond could dump it and sell for lower than N1000 per paper just to exit. If the average price drops to N800 due to high volume of sellers then that interest rate of 10% is now 12.5%, that is N100 dividend by N800.
This means the next time the Nigerian Government goes out to borrow it will no longer attract a 10% yield but will now borrow from investors at a yield of 12.5% or even more. This will cost the government more money in servicing interest thus taking money it could have used for capital projects for debt servicing.

Lack of foreign demand
By taking Nigeria off the index, there will be little or no demand for our bonds from foreign investors. Already, since JPM threatened to yank Nigerian off back in January, foreign holding of our bonds has dropped from a peak of $11 billion in 2013 to $3 billion today. It is therefore likely that this may even shrink further thus affecting the demand for our debts. A lack of demand for our debts means yields may even get higher as fewer investors will now sought for our bonds
Gain for other emerging markets
With Nigeria out of the scene, other emerging markets in Africa like Ghana, Kenya and even South Africa could now be more attractive to investors. They will simply now move their funds to competing countries leaving Nigeria in its wake. Since investors like to follow the money, it is also likely that other forms of investments may elude Nigeria because of this singular move.
Prestige and Clout
With the above happening, Nigeria will lose its prestige as not just the largest economy in Africa but the economy attracting the most foreign investments. This will be damaging to an economy that has been thumping itself as the destination to be for foreign investors.

Corporate Bonds

Local companies and banks also borrow money from foreign investors by selling foreign denominated bonds and also Naira bonds. Now that the Federal Government is likely to see their borrowing cost go up due to this development, it is likely that banks and other corporates seeking to borrow may have to pay more in interest as well. Some companies may not even have the courage to borrow with bonds again due to high lending rates and may result in some companies gets starved of funds so much that they may start to incur losses or even fold up. For those that have even borrowed refinancing such loans will now be expensive as yields have already gone up.

Higher lending rates
For the banks that are lucky enough to borrow, they will have to pass on that cost to someone else. Small businesses which rely on banks for small loans such as overdrafts, local purchase orders, letters of credit etc. may also see their borrowing rates rise even higher. For individuals with consumer loans they may also be expecting a letter from banks telling them that their loan rates have gone up.

Foreign Currency Cost
It is also likely that foreign currencies will cost more to use due to this action. Holiday makers or business travelers who use their cards abroad for foreign denominated transactions may also see themselves paying more whenever they spend their naira debit cards. Since some banks also channels some of their foreign borrowings in the forex market it is likely that they will charge end users more to recover the higher cost of borrowing.

Shallow market
With the exit of most foreign investors the long term plan of the Debt Management Office of ensuring that our bond market is deep is now in jeopardy. With little demand, it is unlikely that the government and other private companies seeking foreign currency loans will use the bond market as a possible source. This will make the market shallow and unattractive and could even throw some companies out of business. For example, Fund Sourcing Companies, Legal Advisers and other consultants may witness a huge reduction in deals thus affecting their revenues.

Ripple Effect
The Nigerian stock market which has seen some bullish trends in recent days may also be negatively impacted. With this announcement it is likely that this may hurt the confidence of foreign investors which make up about 45 to 50% of transactions in the Nigerian Stock Exchange. If they decide to exit the market because of this then the market may just be primed for another long bearish run.

Devaluation
If this situation is not handled properly it may also trigger another massive devaluation. This could be caused by foreign investors who have had enough and will now use this decision by JPM as a reason to pull out their funds. Pulling out their funds creates demand pressure on forex and may result in a devaluation of some sort.

luvinhubby:
This is very very disturbing.
Nigerians, irrespective of party affiliation, religious or tribal differences should rally round and assist our economy from this mess.

masseratti:
it's quite unfortunate that you lot will come online and ask people how old they are,FYI I was in the system, banking system that is during the Tsunami where is intercontinental? Oceanic and the rest,Thank God for sanusi who came to clean the rot,we in the system knew the rot that was going on,if those banks went down it would have cost Nigerians billion NDIC will only pay claims of 200k,that said please check the profits of most banks in the last six years and tell me on what basis they were given global recognition, if the banks did so well why we're they publishing names of debtors recently, economic foot/team my ass,create enabling environment and stop giving it unnecessary names,vision 2000,2010 later 2020,same thing as five point agenda and Gej came with Transformation, all those economic policy and teams amount to nothing if the drivers are corrupt,economic team/council is advisory, the President of he likes might not take their advise.

masseratti:
JP Morgan is a group, in it they have different companies banks etc, any part might cause scandal, am not talking about their opinion, Nigeria failed a transparency test simple, if they have a case they will appeal it but they didnt,and please try and read my earlier post am not holding brief for JP Morgan, my own is for people accusing PMB for the incidence that was performed under Gej.

omonnakoda:
Did Nigeria submit to any test? Who is JP Morgan to test Nigeria?
This is nothing to do with either GEJ Or PMB .

Was Sanusi playing out GEJ's agenda? The Central Bank is quite independent of government and that is how it should be
The CBN was right to do wat tey did and naturally there will be costs.That is the cost of maintaining sovereignty. China does not allow what JP Morgan is advocating and neither should we .If you do not understand what is at stake be quiet, Te reality is the West is broke and have no money to invest in Africa. The real investment will come from within from the likes of Dangote and from Asia

Like I said before Google the words: Corruption or scandal and JP Morgan. Do not take my word for that.

By the way

What is a "Transparency Test" ? Please stop talking rubbish or saying what you do not know . Was this issue about "Transparency" and who defines transparency, What is clear is your undergraduate mindset . You have not learnt how to think for yourself but believe it if it is in a book

stickncarrot:
Who appointed Sanusi into the system? Hope you are still in the banking sector? I wait to hear from you how banks are fairing soon.

masseratti:
ehhhhshhh stop there, this is not a beer parlour, if I set up a test and you apply for it or conduct it,that means you are OK with my yardsticks or parameters not necessarily opinion, you can't state opinions in science test although you can use that's in art test,and pls Oga get off your high horse, Nigeria submitted it self for JP Morgan transparency test and it failed, that has nothing to do with opinion Oga professor calling an unknown person an undergraduate.

SeverusSnape:
Buhari is a curse.

VeeBabs:
Friend, investment is not by sentiments or friendship or patriotism. If a place (country) is favourable for investments, people (investors) will find their way to you. That's what investment advisory companies exist for. And they are constantly keeping tabs on every country's fiscal, political, monetary, economic and environmental situation and decisions, weighing their effects on each country's investment climate according to a highly sophisticated algorithm.

They "sell" their findings (highly educated predictions) to clients the world over (e.g. hedge funds, sovereign wealth funds, private investors etc etc) who look up to them for timely information.

For example, if you, as a Nigerian, had N1 billion naira deposit balance in a particular Nigerian bank, and then you hear (somehow) that that bank will collapse in a month's time, what would you do? Keep your money there to "help them get through the crisis" or HURRY LIKE CRAZY to get your account manager to suck out every last kobo you have there. Now imagine people (foreigners) who have BILLIONS (in dollars) invested.

Nigeria's delisting from the JP Morgan index has its consequencies. Global financial/investment advisory companies/consultants must have alerted all their investor-clients accordingly on the right steps to take following this anticipated delisting (announced since January 2015). What do you think ratings agencies like Standard & Poors, Fitch and Moody's are doing? How about consulting firms like McKinsey, Accenture and the myriad heavy-weights in the financial services sector? They are all constantly monitoring the pulse and blood pressure of each and every country in the world (tracking their political/fiscal/monetary/economic decisions), and using their information to advise their investor-clients regularly!

If your village is the best place on earth to invest, Warren Buffet will waste no time in channelling billions of dollars in that direction. Investment is not by "those who love Nigeria will stay, those who don't love Nigeria will leave". Investors are not begging you. They never were. If you crash your stock market, or evaporate investor confidence somehow, get ready to stand by and watch billions of dollars check out of your economy on per second billing.

Welcome to the 21st Century.

My 2 kobo.

superstar1:
We have already seen the effect of the dumping of the bond from $11bn in January to $3bn now and it cannot get worse than this. They can leave, if they so want. The effect will even be nil for now, because many of he investments are already under weight, as reported by Financial Times.

The economy of Nigeria has always been known to be very resilient and it defile all economic laws and this shall not be another exception. With the way stealing is now corruption, repatriation of stolen fund, blocking of leakages and efficient and effective allocation of government resources, things can only get better.

This is also a golden opportunity for the Asians -- Chinese, Arabs majorly, to come on board once more. It is the American investor's loss.

Surely, we shall pay he price in the short run, but we shall reap the benefits in the medium to long term run.

simpleseyi:
What about your parents? Are they a curse or a blessing to the society? Only cursed parents can bring forth cursed children like you.

SeverusSnape:
Shut your trap. Buhari has eight years, not even four. And for those years, I'll still be around to put him on his toes.

Goke7:
my guy hope you are ready for a very long ride, I must warn you, its not going to be easy o, are you ready for the fire?

SeverusSnape:
Hehehehehehehehehehe

If your little brother is a lecturer, Then my younger brother is a professor. , See who's talking!


Yes, I love insulting the Presidiot, Do you have any problem with that?...oh!, I know, You feel tormented that a "lowly undergraduate" like me is insulting that man, Don't worry, there is more to come.

I've tried being rational with zombies like yourself, But you guys never reason, Even if the truth is staring at you in the face, you'd still blame Jonathan. Even my little cousin knows the after effects of this unfortunate delisting. Why waste my precious time educating zombies?... Zombies ain't gat no brain!!!

Foolish neanderthal!

Kastonkastroll:
You must be very stup!d to think many of us are ediots like you. Tell me you fool, what will be the negative effect of this hullabaloo in the long-run?

Is JP Morgan not just a bank like any other big banks in the world ?


Fool

omonnakoda:
Tell your father to extract himself from the beer parlour.

Nigeria did NOT support itself to ANY TRANSPARENCY test that is rubbish

masseratti:
I very sure you were well trained but you refused to learn lessons, from their words we can know them,i won't stoop so low to abuse your father,your ignorance will make you blind to the fact that in my 1st post which you refuse to read before quoting me won't let you see where I called JP Morgan and all this statistics churning companies and stock exchange a big modern fraud,oga go sleep jare.