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Why FMDQ OTC begins listing of short-term bonds

By Chinyere Joel-Nwokeoma

FMDQ OTC Securities Exchange has announced plans to commence listing of Short-Term Bonds (STBs) to bridge the funding gap between short- and medium- to long-term debt instruments.

This was contained in a statement issued in Lagos on Wednesday and signed by Ms Kaodi Ugoji, Vice President and Divisional Head, Strategy and Corporate Services.

She said the company was delighted to introduce STBs to the Nigerian fixed income market having received the approval of the Securities and Exchange Commission (SEC).

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STBs are essentially short-term debt instruments issued by corporate entities, for tenors of between one year and not exceeding three years.

They are designed to serve the liquidity needs of the medium to large creditworthy corporate and commercial entities by providing an alternative/competitive source of financing to bank loans.

Ugoji added that the STBs would support greater inclusion and participation of corporations in the Nigerian Debt Capital Market (DCM).

She said STBs were beneficial to the DCM as they would boost the investment product bouquet for the buy-side (which comprise the Pension Fund Administrators), offshore investors and other market participants.

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She also announced that SEC had approved the FMDQ Short-Term Bonds Registration Process and Listing Rules (STB Rules), which were developed in furtherance of FMDQ’s commitment to provide effective market regulation and governance for the markets under its purview.

The Vice President said the STB rules would serve as a guide to issuers, STB sponsors and the investing public, among others.

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Ugoji added that the rules outlined the governance structure for STB issuances and the procedure for the registration of prospective STB issuances.

She said FMDQ would serve as the Exchange through which the primary due diligence for all STB issuances should be conducted.

NAN reports that FMDQ, a securities exchange and self-regulatory organisation registered by SEC, provides a platform for listing, quoting and trading of fixed income and currency products.

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