Nigeria is in advanced talks with JP Morgan to re-enter the Government Bond Index (GBI) and regain investors' trust, according to the Director-General of the Debt Management Office (DMO) on Wednesday, April 23rd.

On the fringes of the World Bank and International Monetary Fund (IMF) Spring Meetings in Washington, D.C., Ms. Oniha disclosed this information at a Nigerian Investors' Forum, Premium Times reported.

The head of the DMO clarified that the Central Bank of Nigeria's (CBN) extensive reforms have resulted in Nigeria's recent favourable credit evaluation by rating agencies.

The outlooks are stable, according to Fitch Ratings, which recently raised the Long-Term Issuer Default Ratings (IDRs) of seven Nigerian banks and two bank holding companies from "B-" to "B."

Guaranty Trust Bank Limited (GTB), Guaranty Trust Holding Company Plc (GTCO), Access Bank Plc, Zenith Bank Plc, United Bank for Africa Plc (UBA), First HoldCo Plc (FHC), First Bank of Nigeria Ltd (FBN), Fidelity Bank PLC, and Bank of Industry Limited (BOI) are the issuers that are impacted.

According to the rating agency, Fitch believes that Nigeria's sovereign credit profile no longer significantly limits the issuers' standalone creditworthiness, which is why the banks' Long-Term IDR upgrades came after the recent sovereign upgrade.

The government's broad commitment to policy reforms since switching to orthodox economic policies in June 2023, such as tightening monetary policy, liberalizing the exchange rate, and taking action to eliminate fuel subsidies and deficit monetization, was reflected in Fitch's upgrade of Nigeria's Long-Term IDRs from "B-" to "B" on April 11.

“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks,” Fitch said.

Nigeria's departure from conventional monetary policy and the impact of capital control on its foreign exchange management were the main reasons for its exclusion from the JP Morgan index in 2015.

Nigeria implemented currency controls to protect the naira because it failed to stop a hazardous decline with burning of dollar reserves, primarily because of a decrease in oil revenues at the time.

The bank had previously issued a warning to Nigeria to bring liquidity back to the currency market so that international investors who were following the index could deal with little difficulty.

“Foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency,” the bank said in a 2015 note.

Following the central bank's removal of the condition that foreign investors hold government bonds for a minimum of one year before exiting, Nigeria was included in JP Morgan's emerging government bond index in October 2012.

Nigeria's planned re-entry is a good indication to the market and investors since the JP Morgan Government Bond Index represents investor confidence and provides access to billions of dollars in investment flows.

“With all the reforms that have taken place, particularly around FX, we have started engaging JP Morgan again to get back into the index. We think we are eligible now,” the DMO DG said.