The Securities and Exchange Commission, SEC, has said it will continue to protect investors in the Nigerian capital market, particularly from the negative impact of the falling global prices of crude oil on the economy.
The Acting Director General of SEC, Mounir Gwarzo, reassured bond investors that the capital market regulator was determined to always act in their best interest.
Mr. Gwarzo said this to the Executives of the Association of Corporate Trustees, who visited him in his office in Abuja.
He said the Commission was aware of concerns that the plunge in global crude oil prices may affect the ability of state governments to meet up with their obligations under the Irrevocable Standing Payment Order, required for the approval state government bonds.
The payment order is an important instrument that gives bond investors comfort as funds are deducted at source from the state’s allocation in the Federation Account into the sinking fund from which investors are paid their coupons.
The Trustees, who had raised the issue as their biggest headache, said the impact of the declining crude oil prices should be closely monitored, as it was affecting the revenues of state governments and their ability to meet their obligations on the bond issue.
“It is an issue we need to look at closely, especially with a view to protecting investors, which is ultimately our major responsibility”, the SEC DG said.
Mr. Gwarzo assured the Trustees that the SEC, with the support of the Coordinating Minister for the Economy, would insist on the sanctity of the payment order, considering the impact the arrangement has had on the domestic bond market so far.
He also underscored the urgency for state governments to diversify their revenue base away from over reliance on oil in order to live up to their obligations, while achieving the developmental objectives for their people.
The President of the Association, Funmi Ekundayo, had noted the various initiatives by SEC aimed at developing the capital market, assuring the new management of their continued support and cooperation as a trade group in the quest to move the market to the next level.
“Our role as protectors of the investor cannot be over-emphasized. In compliance with our responsibilities within the Trust Deed, we ensure that investors are always protected and repaid as and when due. We are happy with the support you give us which has continued to strengthen investor confidence in the market,” she said.