Afrivest harps on robust secondary market

THE Executive Director of Afrivest West Africa Limited, Malcolm Gilroy has said that the Nigerian market would have no sustainability without a robust secondary market as the main buyers will eventually be filled with prior issues and have no way to sell them, thus have no appetite for new issues.Speaking at the 4th Quarterly Risk Roundtable recently in Lagos Gilroy explained that the DMO had not performed its regulatory duty to enforce the smooth operations of the secondary market. It appears they view their function to be mainly the operation of the primary market.According to him, it appeared that banks had now reached this stage and other buyers were not encouraged to enter the market due to its lack of liquidity.Gilroy added that currently N1.4 trillion worth of bonds are maturing within the next three years. This represents 55 per cent of total DMO issued bond stock of the nation. Of this N465billion matures in one issue in February 2013 followed by another N181 billion in November of 2013.He stated that AMCON had issued N2.7 trillion of zero coupon bonds that mature in December 2013 and need to float at least N1 trillion more in the near future.He continued: The market will thus be forced to absorb in excess of 125 per cent of its current capacity within the next thirty months. This assumes AMCON will not need further resources over the next thirty months and we know that they still need to purchase non- performing loans from a number of banks and new loans are being put to them regularly.
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