Several international investors who have acquired Nigerian government debt securities no longer find them attractive. However, they cannot get rid of it, because repatriating their capital will be complex. Access to the Dollar has been suspended for foreign investors.

Foreign investors who have invested money in debt securities issued by the Nigerian government are trapped after recent developments in the short-term credit market.

The economic difficulties caused by covid-19 have destroyed confidence in the shares of listed companies. In this context, lending money to the State has become the safe haven investment par excellence for those who hold funds.

Nigeria has always attracted foreign investors on its internal public debt. Its nearly $450 billion in gross domestic product generated by Africa's most populous economy as well as double-digit interest yields have always appealed to investors targeting (profitable, but immature) frontier markets like Nigeria. .

For the country chaired by Muhammadu Buhari, this attraction is an opportunity, because the portfolio of foreign investments in public debt securities has become an essential element of its foreign exchange reserves. However, the country is now struggling to keep its investors in bond portfolios.

The allocation of more funds to treasury bills and bonds by local investors, including pension funds and other local fund managers such as insurance has resulted in lower bond yields. At the same time, for the purposes of balancing the budget, the Nigerian government cannot borrow beyond its capacity.

On government bonds with a maturity of 12 months, which are the benchmark, returns for investors are now around 3.5% against 13% a year earlier. This rate is the lowest in the last ten years, according to data analyzed by the Ecofin Agency. In addition, it is no longer sufficiently attractive for international investors, especially since the naira has been devalued twice since the start of the year, accentuating the risk of exchange losses.

However, despite this environment that has become less attractive, these portfolio investors in Nigeria's internal debt cannot repatriate their capital. The country's Central Bank has stopped making dollars available for capital repatriation needs by foreign investors.

The Egyptian investment firm EFG Hermes estimated in a note to investors mentioned by Bloomberg that these challenges relate to an amount of 2.5 billion.