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Nigeria's local-currency government bonds have been included in a new emerging markets benchmark managed by J.P. Morgan, a move expected to attract fresh foreign investment into the country's debt market and underscore growing investor confidence in its economic reforms.

J.P. Morgan announced the inclusion of selected Federal Government of Nigeria (FGN) bonds in its newly launched Government Bond Index-Emerging Markets Edge (GBI-EM Edge), which tracks local-currency government debt across 26 frontier emerging markets.

According to Nigeria's Federal Ministry of Finance, the decision reflects improvements in the country's macroeconomic environment, including the stabilisation of the naira, the clearance of foreign exchange backlogs, and stronger economic growth and inflation trends that have helped restore confidence among international investors.

Nigeria enters the index with a weighting of 7.4%, one of the largest allocations among participating countries and close to J.P. Morgan's maximum country weighting of 8%. The country qualified for inclusion based on the liquidity of its bond market and the size of its outstanding government debt issues, the ministry said.

The development marks Nigeria's return to a J.P. Morgan bond benchmark for the first time since 2015, when it was removed from the bank's flagship Government Bond Index-Emerging Markets Global Diversified index amid foreign exchange liquidity challenges.

Officials said the latest inclusion highlights progress made under ongoing economic reforms aimed at improving market transparency and foreign investor access.

The ministry noted that Nigeria's previous inclusion in a J.P. Morgan emerging markets bond index in 2012 helped attract significant foreign investment into the domestic debt market, reduced borrowing costs by about 200 basis points, boosted foreign exchange reserves and encouraged flows into the banking and equities sectors.

The new GBI-EM Edge index tracks approximately $328 billion in local-currency government debt globally. Nigeria's allocation represents about $17.47 billion in eligible FGN debt spread across 16 bond instruments.

Market analysts expect index-tracking funds to adjust their portfolios to reflect Nigeria's weighting, generating additional foreign portfolio inflows into the country's bond market over time.

The increased demand could support bond prices and contribute to lower yields, helping to reduce the government's cost of servicing naira-denominated debt. Improved liquidity in the FGN bond market is also expected to have positive spillover effects across the broader Nigerian fixed-income market, including Treasury bills.

Commenting on the development, Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele described the inclusion as a vote of confidence in the government's reform agenda.

"This inclusion is a clear, independent endorsement of the discipline behind President Bola Ahmed Tinubu's reform agenda," Oyedele said. "It reflects the confidence international capital markets now place in Nigeria's economic management, and it lowers the cost of financing our development priorities."

He added that the government remained focused on achieving the conditions necessary for reinstatement in J.P. Morgan's flagship emerging markets bond index.

The Federal Ministry of Finance said the government would continue pursuing reforms aimed at strengthening investor confidence and deepening the domestic capital market, while positioning Nigeria for greater participation in global investment benchmarks.