CBN Rate Hikes Spark Surge In Fixed-Income Demand, Boost Investment Banking Activity
By FIDELUS ZWANSON
AGGRESSIVE interest rate hikes by the Central Bank of Nigeria (CBN) drove strong investor demand for fixed-income instruments in 2024, according to the President of the Association of Issuing Houses of Nigeria (AIHN), Kemi Awodein.
Speaking at the association’s annual general meeting in Lagos, Awodein said the apex bank’s rapid tightening—eight rate hikes totalling 875 basis points—pushed the benchmark interest rate from 18.75% to 27.5% by November, a strategy aimed at taming inflation. Rate spikes in February and March alone accounted for 600 basis points.
AIHN’s 2024 financial report showed improved performance, with total funds and liabilities rising to ₦518.2 million from ₦452.6 million in 2023. Income climbed to ₦123.6 million, while expenditure reached ₦60.75 million, resulting in a surplus of ₦62.9 million.
Awodein noted that high rates crowded out private-sector issuers, while government borrowing surged. Sales of OMO bills and Treasury bills soared to ₦12.83 trillion in 2024, compared to ₦716.7 billion in 2023. Despite the pressures, investor confidence strengthened later in the year, aided by policy shifts and expectations of easing in global markets. A key milestone was the Debt Management Office’s issuance of Nigeria’s first domestic dollar bond.
The investment banking sector also saw renewed momentum, driven by the CBN’s March announcement of bank recapitalisation. By year-end, several banks—including Access Bank, Fidelity Bank, GTBank, FCMB and Zenith Bank—had begun raising capital to meet new requirements, with Access Bank already meeting its target ahead of the 2026 deadline.
Awodein highlighted additional market developments, including Aradel Holdings Plc’s transition from the NASD to the Nigerian Exchange, which improved liquidity for investors. However, long-term debt issuance remained muted due to the high-rate environment and heavy government activity, leaving commercial papers as the dominant private-sector option.
Major corporate deals in 2024 included Seplat Energy’s $650 million bond and Airtel Africa’s $500 million capital raise, both aimed at expanding operational capacity.
