CBN’s MPR Hike Spurs PFAs’ Investments in Corporate Debt Securities by 38%


Pension Funds Administrators (PFAs), Nigeria’s largest investment group, are boosting their holdings in corporate bonds to capitalize on the heightened interest rate environment spurred by the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) hike.

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The recent increase in the MPR to 24.75% by the CBN has led to higher returns on fixed income securities, prompting PFAs to ramp up their investments in Corporate Debt Securities. According to data from the National Pension Commission (PenCom), PFAs’ investments in Corporate Debt Securities surged by 38.0% year-on-year to N2.304 trillion in the two months ending February 2024, compared to N1.611 trillion in the corresponding period in 2023.

During this period, PFAs allocated 11.7% of their total Pension Fund Assets, amounting to N19.759 trillion, to Corporate Debt Securities. Analysis of the investment breakdown for February 2024 revealed that Hold to Maturity (HTM) Corporate Bonds accounted for 61.4% of total Corporate Debt Securities, totaling N1.415 trillion, followed by Available for Sale (AFS) Corporate Bonds at N871.375 billion, representing 37.8% of the total. Corporate Infrastructure Bonds and Corporate Green Bonds recorded smaller proportions.

David Adonri, Vice Executive Chairman of Highcap Securities Limited, attributed the increased investment in Corporate Debt Securities to the rising MPR, emphasizing its role as a benchmark for determining interest rates. He also highlighted the safety aspect of fixed income investments and the shift of attention from equities to debt by institutional investors. Additionally, Mallam Garba, CEO of APT Securities & Funds Limited, linked PFAs’ growing bond investments to the continuous MPR hike, suggesting that the rise to 24.75% could further attract investments to fixed income instruments.

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Godwin Okafor
Godwin Okafor
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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