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DMO to Sell N225bn FGN Bonds Today at Primary Market

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N150bn FGN Bonds

By Dipo Olowookere

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

According to a circular released by the agency, all the three maturities are re-opening, meaning they are from the previously sold bonds.

Business Post reports that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction, another N75 billion worth of a 10-year note maturing in 2032 is up for grab and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Based on recent happenings, especially with inflation nearing 18 per cent and the benchmark interest rate pushed to 13 per cent by the Central Bank of Nigeria (CBN), the debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment on the maturity date.

Today’s PMA is expected to witness a significant increase in subscriptions and the debt office is anticipated to make it attractive because it would want more investors to be interested in the instrument, especially at a time the national government failed to sell its Eurobond to international investors due to pricing.

Like it did in 2020 when it cancelled its Eurobond sale due to the COVID-19 pandemic, the suspended $950 million Eurobond would be diverted to domestic investors and this should result in a hike in the coupon rate, which subscribers will welcome with both hands.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

Economy

FrieslandCampina Boosts NASD OTC Bourse by 0.08% at Midweek

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NASD OTC Bourse

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed in the positive zone by 0.08 per cent on Wednesday, June 29 driven by a bullish price movement from FrieslandCampina WAMCO Nigeria Plc.

The milk-producing company appreciated during the midweek session by 99 Kobo or 1.03 per cent to settle at N96.79 per share compared with the previous closing price of N95.80 per share.

The NASD OTC bourse recorded a price loser and it was Niger Delta Exploration and Production (NDEP) Plc, which depreciated by N6.21 or 3.14 per cent to N191.79 per unit from N198.00 per unit.

But the gains printed by FrieslandCampina offset the losses reported by NDEP as the market capitalisation expanded by N810 million to N1.005 trillion from N1.004 trillion, while the NASD Unlisted Securities Index (NSI) increased by 0.62 points to wrap the session at 763.24 points compared with the 762.62 points recorded in the previous session.

Securities worth N10.1 million were bought and sold by traders at the market on Wednesday compared with the N1.8 million securities transacted a day earlier, indicating an increase of 462.5 per cent.

However, the volume of the securities went down by 18.9 per cent as investors traded only 72,550 units, 18.9 per cent lower than the 89,440 units transacted in the preceding session.

The transactions were carried out in 20 deals as against the 11 deals executed on the bourse on Tuesday, implying a decline of 81.8 per cent rise.

AG Mortgage Plc remained the most traded stock by volume (year-to-date) with 2.3 billion units valued at N1.2 billion, Central Securities Clearing System (CSCS) Plc stood in second place with 674.4 million units worth N14.1 billion, while Food Concepts Plc was in third place with 146.5 million units valued at N127.2 million.

On the flip side, CSCS Plc was the most active stock by value (year-to-date) with 674.4 million units exchanged for N14.1 billion, VFD Group Plc was in second place with 10.9 million units worth N3.2 billion, while FrieslandCampina Plc was in third place with 9.7 million units valued at N1.3 billion.

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Economy

Crude Oil Drops as Economic Worries Offset Tighter Supply Signals

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crude oil export

By Adedapo Adesanya

Prices of crude oil were in red on Wednesday as worries about a weaker global economy offset data showing a weekly drawdown in crude stockpiles, indicating supplies remained tight.

Investors are also worried a slowing economy could dent energy demand as central banks hike interest rates to battle inflation, causing the price of the Brent crude to fall yesterday by 1.75 per cent or $2.06 to $115.90 per barrel, with the United States West Texas Intermediate (WTI) dropping 1.98 per cent or $2.21 to $109.50 a barrel.

US crude inventories fell last week even as production hit its highest level since April 2020 during the first wave of the coronavirus pandemic.

Even comments from the US central bank chief did nothing to quell the fear as prices went down.

The US Federal Reserve Chair, Mr Jerome Powell, announced that the economy would not be allowed to slip into a “higher inflation regime” even if it means raising interest rates to levels that put growth at risk.

The oil market had been propelled in the previous session as concerns over tight supplies due to Western sanctions on Russia outweighed fears that demand may slow in a potential future recession.

Analysts are concerned that Saudi Arabia and the United Arab Emirates (UAE) may not have enough spare capacity to make up for the lost Russian supply.

French President, Mr Emmanuel Macron, said this week he was told these producers will struggle to increase output further.

However, the UAE energy minister said the country, which is producing about 3 million barrels per day, has some spare capacity above its OPEC quota of 3.17 million barrels per day.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies such as Russia, which form the OPEC+ group, began a series of two-day meetings on Wednesday and will hold its official meeting on Thursday.

There are no indications that there will be changes to the current level of output as was agreed earlier this month.

At its last meeting in early June, OPEC+ sped up production cuts and agreed to raise output each month by 648,000 barrels per day in July and August, up from earlier increases of 432,000 barrels per day.

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Economy

Naira Plunges to New Low at Spot Market, Trades N610/$1 at Parallel Market

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Spot Market

By Adedapo Adesanya

The Naira on Wednesday, June 29 depreciated to its lowest level in the Investors and Exporters (I&E) segment of the foreign exchange (FX) market.

Amid a biting forex crunch, the local currency fell by N3.88 or 0.80 per cent against the US Dollar to close at N424.88/$1 versus the N421.00/$1 it was sold on Tuesday despite a decline in the value of transactions at the spot market.

According to data from the FMDQ Securities Exchange, the turnover for the midweek session was $112.83 million, 45.4 per cent or $93.82 million lower than the turnover of $206.65 million published the day before.

Also, in the parallel market, the domestic currency reported a dismal performance against the greenback as it lost N1 to quote at N610/$1 compared with the previous day’s value of N609/$1.

However, the value of the Naira to the Dollar remained unchanged at the Peer-to-Peer market window at N619/$1.

In the interbank segment of the market, the Naira appreciated against the British currency – the Pound Sterling and the Euro.

Against the Pound Sterling, it was strengthened by N3.91 to N505.91/£1 from N509.82/£1 and against the Euro, it gained N1.90 to settle at N437.59/€1 versus N439.49/€1 on Tuesday.

Meanwhile, four of the 10 tokens monitored by Business Post closed in the green territory, with the TerraClassicUSD (USTC) recovering more grounds as it traded higher by 59.9 per cent to $0.0691. Dogecoin (DOGE) rose by 5.4 per cent to trade at $0.0707, Litecoin (LTC) went up by 1.9 per cent to settle at $54.15, while Bitcoin (BTC) added 0.3 per cent to its value to close at $20,315.78.

However, Binance Coin (BNB) recorded a 4.7 per cent fall to sell at $221.44, Ethereum (ETH) depreciated by 3.7 per cent to $1,116.72, Solana (SOL) decreased by 3.6 per cent to $34.68, Ripple (XRP) recorded a 1.9 per cent slide to sell for $0.3329, Cardano (ADA) dropped 0.2 per cent to trade at $0.4722, while the US Dollar Tether (USDT) moved downwards by 0.02 per cent to $0.9989.

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