The Association of Issuing Houses of Nigeria (AIHN) says the Central Bank of Nigeria’s (CBN) aggressive interest rate hikes in 2024 sharply boosted investor appetite for fixed-income instruments but also squeezed out private-sector issuers from the debt market.
AIHN President, Kemi Awodein, stated this in Lagos at the association’s Annual General Meeting and presentation of its 2024 financial statements.
She noted that the CBN leaned heavily on monetary tightening to battle inflation throughout 2024.
“Key drivers for fixed income instruments in 2024 included CBN’s aggressive interest rate hikes to combat inflation,” she said. “In 2024, CBN hiked the benchmark interest rate eight times and by 875 basis points to 27.5 per cent in November from 18.75 per cent at the beginning of the year.”
The steep rise in yields triggered a surge in demand for government securities. According to Awodein, about ₦12.83 trillion in Open Market Operation (OMO) bills and Treasury bills were sold in 2024, compared with just ₦716.7 billion for the whole of 2023.
She warned, however, that the high-interest environment led to a “crowding out” of the private sector, as federal government instruments soaked up liquidity and made long-term corporate borrowing less attractive.
“Long-term debt capital raises were muted in 2024 in light of the interest rate regime and the significant and frequent issuances by the Federal Government. The private sector was essentially crowded out. Activities in debt capital raising were concentrated in commercial paper issuances,” she explained.
Despite the challenges, Awodein said investor confidence improved as the year progressed, helped by government policy signals and expectations of future rate cuts in other markets. She highlighted the first domestic dollar bond issued by the Debt Management Office (DMO) as a notable development.
On the equity side, she said recapitalisation directives issued by the CBN in March 2024 spurred significant capital-raising activity in the banking sector.
“By year-end, a number of banking institutions had concluded transactions, with Access Bank Plc announcing the attainment of the new regulatory capital. The activity in the sector will continue in earnest in 2025 as the deadline of March 2026 approaches,” she said.
Awodein also cited landmark private-sector transactions, including Seplat Energy’s $650 million bond and Airtel Africa’s $500 million capital raise, aimed at expanding energy operations and strengthening telecoms infrastructure respectively.
AIHN’s own 2024 financials showed a stronger position:
Expenditure climbed from ₦50.08 million to ₦60.75 million, resulting in a surplus of ₦62.9 million in 2024, up from ₦36.4 million in 2023.
Total funds and liabilities rose from ₦452.6 million in 2023 to ₦518.2 million in 2024.
Total income increased from ₦86.56 million to ₦123.6 million.
