The Securities and Exchange Commission (SEC) has urged Capital Market Operators (CMOs) in Nigeria to review the proclivity of issuance of debt instruments by both state and local government agencies.
Executive Commissioner, Operations, SEC, Bola Ajomale stated this at the 2024 International Credit Rating Webinar organised by DataPro Limited.
A statement by the Business Development Manager of DataPro, Kehinde Rasheed quoted Ajomale, who represented the Director-general of the commission Emomotimi Agama as saying, “Irrevocable Standing Payment Orders (ISPOs) from the state government cannot be the only measure of assurance and risk mitigation, CRAs must alter their measurement metrics to accommodate rising risk levels and increasing requirements for sustainability for any instrument raised by a State or quasi-government body.”
Ajomale, who identified the tendency for some state governments to issue private bonds guaranteed by the state government, pointed out that the processes do not have any proof of secondary market value and that they need to be assessed for the delivery of the stated project objectives.
