Nigeria has been included in J.P. Morgan’s newly introduced Government Bond Index Emerging Markets Edge (GBI EM Edge), giving Nigerian government bonds a 7.4 percent weighting in the new benchmark.
The development marks the return of Nigerian naira denominated government securities to a J.P. Morgan emerging market benchmark more than a decade after the country was removed from the bank’s major government bond index in 2015. However, the latest inclusion does not mean Nigeria has returned to J.P. Morgan’s GBI EM Global Diversified index. The GBI EM Edge is a separate benchmark designed to track government bonds from frontier and emerging markets that are not included in the main index.
According to J.P. Morgan’s Global Index Research report dated September 14, Nigeria has been assigned a 7.40 percent weighting in the new index. This is close to the maximum country weighting of 8 percent. The Nigerian securities included in the benchmark are valued at about $17.47 billion and consist of 16 government bond instruments. The securities have an average yield to maturity of 17.1 percent, a duration of 3.38 years and a B minus sovereign credit rating.
Several other countries have also received significant allocations. Vietnam, Egypt, Morocco, Pakistan, Bangladesh and Kazakhstan each have the maximum 8 percent weighting, while Sri Lanka has 7.50 percent. Kenya has a 6.91 percent weighting, followed by Tunisia at 5.32 percent and Uganda at 4.84 percent. The new benchmark covers about $328 billion in local currency government debt across 425 securities, 26 markets and 24 currencies.
Frontier African countries account for 44.5 percent of the index, while Asian markets represent 31.5 percent. For Nigeria, the inclusion could improve the visibility of its government bonds among international investors. This is important because Nigerian securities offer significantly higher yields than the average across the new index.
The average yield of Nigerian securities in the benchmark stands at 17.1 percent, compared with an average of 10.39 percent for the overall index. The development comes after years of changes in Nigeria’s relationship with J.P. Morgan’s bond benchmarks. Nigeria was initially admitted into J.P. Morgan’s Government Bond Index in October 2012. At the time, the country had developed a more active domestic government bond market supported by market makers, a two way quotation system and a broad investor base.
However, J.P. Morgan placed Nigeria on its Index Watch list in January 2015. The bank raised concerns about foreign exchange market liquidity, difficulties with capital repatriation, limited transparency in exchange rate determination and the lack of a functional two way foreign exchange market. Nigeria was subsequently removed from the index in September 2015. The country was also removed from J.P. Morgan’s overweight emerging market sovereign debt recommendation in 2022 because of concerns about macroeconomic risks.
Discussions about Nigeria’s possible return to J.P. Morgan’s bond indexes resumed in 2025 as the government introduced reforms aimed at improving the foreign exchange market. The latest inclusion suggests that some of those reforms have helped improve the attractiveness and visibility of Nigeria’s domestic debt market. The new GBI EM Edge is designed to provide investors with exposure to countries whose local currency government bond markets are not represented in J.P. Morgan’s main GBI EM Global Diversified index.
For Nigeria, the inclusion could potentially broaden the pool of international investors interested in Federal Government bonds and increase the country’s participation in global fixed income markets. The development also comes at a time when investors are searching for higher yielding government securities in emerging and frontier markets.
With Nigeria carrying a 7.4 percent weighting, the country is now one of the more significant markets in J.P. Morgan’s new benchmark.
