FMDQ Positions to Quote Private Companies’ Bonds

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FMDQ OTC Securities Exchange (FMDQ) is facilitating the quotation of private companies’ bonds as part of its commitment to support efforts aimed at galvanising the development of the Nigerian economy.

Private companies’ bonds by law can only be issued through private placements. Some of the Nigerian, significantly important, private companies in oil & gas, power, telecommunications, manufacturing and infrastructure require long-term funding.

Currently, their long-term funds are structured as loans and funded by banks thereby putting their balance sheets under significant risk management, liquidity and capital adequacy pressures.

Given the foregoing, FMDQ said on Friday that it intended to establish the requisite market governance over these private companies’ bonds as part of its investor protection standards in making the Nigerian debt capital market globally competitive to attract pension funds and foreign capital.

According to thisday’s reports, FMDQ is establishing the building blocks to redefine access to long-term debt capital for private companies and ventures in Nigeria. FMDQ is promoting the market structure that will facilitate the injection of credibility and transparency to the quotation of private companies’ bonds that, by law, can only be issued through private placements,” the company said.

According to the securities exchange, the Nigerian market for bonds of private companies is undeveloped and currently not under any market governance, implying the absence of an oversight and proper governance on the activities in that space. “Consequently, FMDQ, in its capacity as an over-the-counter (OTC) securities exchange as well as a self-regulatory organisation, is fulfilling its responsibility and has taken up the challenge of tackling the attendant inadequacies evident in any unregulated market by developing Quotation Rules for bonds  issued by private companies with the aim of providing adequate governance over the registration, quotation and trading of bonds of private companies on FMDQ, thereby potentially serving as the benchmark for how this market is regulated in Nigeria as a whole,” it explained.

It added that there is the existing secondary market trading of debt securities issued by large and credible private companies in Nigeria by FMDQ Dealing Members, therefore the quotation of such debts on FMDQ will formalise the current arrangement, bringing, among other benefits typical of an FMDQ quotations service, the expedient visibility to the securities.


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