The Association of Issuing Houses of Nigeria (AIHN) has credited the Central Bank of Nigeria’s (CBN) aggressive interest rate hikes in 2024 for driving increased investor demand for fixed income instruments.
Speaking at AIHN’s Annual General Meeting and presentation of the 2024 financial statements in Lagos, AIHN President Kemi Awodein said the apex bank used interest rate adjustments as a key tool to tackle inflation.
She stated, “Key drivers for fixed income instruments in 2024 included CBN’s aggressive interest rate hikes to combat inflation. There were significant interest rate hikes in February and March 2024—a total of 600 basis points—aimed at curbing inflation. In 2024, CBN hiked the benchmark interest rate eight times, by 875 basis points, to 27.5 per cent in November from 18.75 per cent at the beginning of the year.”
Awodein noted that the high interest rate environment initially crowded out the private sector, affecting issuance activities. “Data indicates that about N12.83 trillion in Open Market Operation bills and Treasury bills were sold compared to N716.7 billion for the whole of 2023. Despite these challenges, as the year progressed, there was renewed investor confidence, leading to increased capital inflows. This was driven by government policies and the anticipation of interest rate cuts in other markets. Significant in the year was the successful issuance of the first domestic dollar bond by the Debt Management Office,” she added.
Highlighting activity in the investment banking sector, Awodein revealed that equity capital raises were spurred by CBN’s recapitalisation announcement in March 2024. “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 further explained that long-term debt capital raises were subdued due to the high interest rate regime and frequent Federal Government issuances, which crowded out private sector participants. “Activities in debt capital raising were concentrated in Commercial Paper issuances. Prominent transactions included Seplat Energy’s $650 million bond issuance, aimed at expanding its energy operations, and Airtel Africa’s $500 million capital raise to enhance telecommunications infrastructure.”
The AIHN 2024 financial statements showed growth in total funds and liabilities from N452.6 million in 2023 to N518.2 million in 2024. Total income rose from N86.56 million to N123.6 million, while expenditure increased from N50.08 million in 2023 to N60.75 million in 2024, resulting in a surplus of N62.9 million compared to N36.4 million in 2023.
