Nigeria forex curbs trigger bond market sell-off

More investors could exit Nigeria's bond market on concerns that new foreign exchange curbs would hinder capital repatriation.
Nigeria's central bank restricted access to forex by importers in its bid to protect its reserves, but dealers say the measure is threatening the future of Nigeria's bonds on JP Morgan government Bond Index.
The rules curb access to forex to fund purchase of foreign shares and bonds, among others.
Yields rose across maturities this week, spurred by the sell-off by some offshore investors cutting their risk in emerging markets and lack of interest from local pensions.
"We have seen a number of offshore investors exiting their positions in the debt market in reaction to the new central bank foreign exchange measures and this trend will continue until we have a clear policy direction from the new government," one dealer said.
Traders said some banks are also exiting their positions in the long tenor debt market and switching to short-dated paper because of the fore control measures by the central bank.
JP Morgan has threatened to eject Nigeria from its Government Bond Index (GBI-EM) by the end of the year unless it restores liquidity to currency markets in a way that allows foreign investors tracking the benchmark to conduct transactions with minimal hurdles.  
 The yield on the benchmark debt maturing in 2024 rose to 14.87 percent on Friday from 14.28 percent a week ago.
The 2022 paper yield rose to 14.82 percent against 14.48 percent, while the 2016 debt advanced to 14.61 percent from 14.39 percent last week.