Interest Rate: PFAs raise investment in FGN securities by 17.7% to N13.8trn
CHIGOZIE AMADI
In an apparent bid to take advantage of the prevailing high interest rate regime, Pension Fund Administrators, PFAs have increased investment in FGN Securities by 17.7 per cent, year-on-year, to N13.8 trillion in November 2024.
The National Pension Commission, PenCom, disclosed this in its monthly report published on its website.
The report showed that the investment in Federal Government FG securities went up 17.7% Year-on-Year, YoY, to N13.833 trillion in November 2024 from N11.749 trillion in the corresponding period of 2023.
The securities include: FG Bonds, Treasury Bills, Agency Bonds, SUKUK Bonds and Green Bonds.
Vanguard analysis showed that the PFAs investment in FGN Bonds rose by 6.2% to N11.957 trillion in November 2024 from N11.254 trillion in the corresponding period 2023.
Investment in Treasury Bills surged by 136.6 % to N575.2 billion from N243.1 billion in 2023.
However, investment in SUKUK Bonds fell by 21.7 per cent to N105 billion, from N134.8 billion.
Agency Bonds recorded a 5.5% increase to N10.6 billion from N10.05 billion, while Green Bonds recorded N2.9 billion in November 2024 , representing a decline by 97.3 % from 106.9 billion in the corresponding period 2023.
Reacting to this development, analyst and Head of Investment and Research at Fidelity Securities Limited, FSL, Mr Victor Chiazor, said: “The rise in PFAs’ investments in government securities is triggered by the interest rate friendly environment during this period.
“More of this investment is expected to be increased this year 2025 especially if inflation rate keeps rising.”
On his part, analyst and Executive Vice Chairman at High CAP Securities Limited, David Adonri said: “The Investment in FGN Bonds by PFAs is necessary because of its low risk when compared to other investments. Also, interest rate regime drives up investments in FGN Savings Bond
Commenting on the development, Managing Director/Chief Executive, CEO, Wyoming Capital and Partners, Tajudeen Olayinka said: “I think the surge could be attributed to increased awareness and investors’ appetite to hold moderately volatile instruments in the midst of numerous headwinds”.
