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Barclays To Cut Nigeria Off Its EM Local Bond Index In Feb

Barclays To Cut Nigeria Off Its EM Local Bond Index In Feb

Nigeria will be cut off Barclays’ Emerging Markets Local Currency Government Index as of February next year due to what the bank says are challenging “investment conditions” for foreigners in the last year-and-half.

The Africa’s largest economy that rely heavily on oil export for revenue has come into some serious headwind after oil prices collapsed on the on the international market by more than 40 percent since the last quarter of 2014.

The country’s local currency has fallen more than 22 percent this year, forcing the Central Bank of Nigeria to introduce stiffer trading foreign exchange rules that have made it difficult for foreigners to exit the country’s assets.

“Nigeria will be removed from the flagship Emerging Markets Local Currency Government Index as of February 1, 2016,” Barclays said in a statement.

“The Central Bank of Nigeria has introduced a number of measures that have complicated managing Nigerian bond government index exposure, specifically restricting access to the naira,” it added.

Barclays removal of Nigeria from the index is likely to deny the country some structural debt support, Financial Times reported.

In September, the West African nation was ejected from the JP Morgan’s Government Bond Index-Emerging Markets, or GBI-EM, citing a shortage of liquidity in Nigerian markets due to restrictive foreign exchange trading rules the central bank introduced earlier this year.

Nigerian capital markets were caught by surprise by the JPMorgan decision causing share at the bourse to slump and bond yield to jump in reaction.