Interest Rate: PFAs raise investment in FGN securities by 17.7% to N13.8trn

Pension Fund Administrators (PFAs) have significantly increased their investments in Federal Government (FGN) securities, raising the total by 17.7% year-on-year to N13.8 trillion in November 2024. This increase comes as PFAs take advantage of the high interest rate environment, with a notable rise in investments in government bonds, treasury bills, and other related securities. The figures were disclosed by the National Pension Commission (PenCom) in its monthly report.

The increase is largely attributed to a surge in investment in FGN Bonds, which rose by 6.2% to N11.96 trillion, and Treasury Bills, which saw a massive 136.6% jump to N575.2 billion. However, investments in SUKUK Bonds fell by 21.7%, while Green Bonds saw a dramatic 97.3% decrease. Despite the decline in some sectors, the overall investment in FGN securities remains strong, reflecting a shift in strategy by PFAs.

Industry analysts suggest that the rise in PFA investments is driven by the current favorable interest rate environment. Experts predict that this trend could continue into 2025, especially if inflation remains high. The low-risk nature of FGN Bonds and the attractive returns offered by government securities continue to make them a preferred investment choice for PFAs looking to stabilize their portfolios amid economic challenges.

Source: Vanguard