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FG Raises N7b from Savings Bond in 10 Months

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Savings Bond

By Leadership

The federal government has raised a total sum of N7.3 billion in the past 10 months from its savings bond introduced in March 2017 to boost domestic investors’ participation in the bond market.

The government, this year, planned to use the savings bond to finance the budget deficit but investors’ appetite for investment in the savings bond diminished in the fourth quarter of 2017.

The December allotment figure shows that N246.41 million had been raised, which is the lowest savings bond the Debt Management Office (DMO) generated this year over drop in coupon rate.

Analysts attributed the drop in savings bond coupon to improved macro economy.

Managing Director of Highcap Securities Limited, Mr David Adnori said, “The savings bond coupon rate dropped due to improvement in macro economy as interest rate is on decline in the economy. Rates on bonds and Treasury Bills (T-Bills) are all declining”.

The coupon rate allocated were 11.738 per cent for FGNSB DEC 2019, which is a two-year bond and 12.738 per cent for FGNSB DEC 2020, representing a three-year bond.

For November allotment, the figures show that N256 million had been raised through 12.091 per cent (FGNSB NOV 2019) two-year bond and 13.091 per cent (FGNSB NOV 2020) three-year bond.

Subscription in November was the second lowest as investors’ appetite started dropping.

Before November and December, the average coupon rate on FG’s savings bond was pegged at an average 12 per cent to 13 per cent, with a two-year and three -year bonds.

In October, the saving bond allotment dropped by 5.6 per cent to N389.19 million from N412.7 billion, following the slowdown in coupon rates.

The coupon rate assigned to a FGNSB OCT 2019 and FGNSB OCT 2020 in October was at 12.059 per cent and 13.059 per cent respectively, while in September, the coupon rate was at 13.817 per cent (FGNSB SEP 2019) and 14.817 per cent (FGNSB SEP 2020)respectively.

Before the last quarter of 2017, there was increased participation at the debt market in the first quarter as demand for T- Bills, FGN Bonds and the Savings bond increased relative to supply.

Specifically, in March the debt office had raised N2.068 billion from the 13.01 per cent two years debt with 2,575 total number of successful subscriptions.

According to LEADERSHIP findings, data from Debt Management Office (DMO) showed that the initial auction of the savings bond still had the largest participation in the first quarter and started dropping in the second and third quarter.

At the end of first quarter in April, DMO raised N1,288.02 billion that comprises of N419.33million and N868.69 million for a 12.794 per cent and 13.794 per cent, two- year and three-year savings bond respectively.

In May, it raised N791.15 billion with yields rising to 13.189 per cent for the two-year paper and 14.189 per cent for the three-year allotment.

The yield remained the same in June but the amount raised dropped to N607.26 million.

However, an increased yield failed to spike interest in July, as only N400.57 million was raised from the two-year and three-year paper, although the yield for the papers were raised to 13.386 and 14.836 per cents respectively.

By August, investors’ interest in the savings bond increased along with the yield offered.

The two-year bond was offered at 13.535 per cent, while the three-year Savings bond was offered at 14.535 per cent, just as the DMO was able to raise N738.14 million through the Savings Bond.

Analysts maintained that many retail investors traded with caution following the yuletide celebration, while some diverted funds to the equity market, foreign exchange market, as yield on savings bond and T-Bills are not attractive.

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

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Economy

NNPC’ll Earn More Revenue—Kyari

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NNPC Dangote Refinery

By Adedapo Adesanya

The Nigerian National Petroleum Company Limited (NNPC) is set to earn more revenue for the country as the federal government has positioned it to become the most capitalised company in Africa, says the Chief Executive Officer (CEO) of the company, Mr Mele Kyari.

This will happen as the central government has commenced full implementation of the Petroleum Industry Act (PIA) in earnest.

Mr Kyari made this assertion while addressing staff in a town hall meeting at the weekend said the PIA had put “all money-making options on the table; it is up to us to take advantage of it”.

Highlighting the significance of the PIA to the NNPC and by extension the Nigerian economy, Mr Kyari said the new legislation has raised shareholders’ expectations on the company, even as it has given it wide room to make progress.

He said as a result of the new legislation, NNPC Limited would not only shed some of its toxic liabilities but will be the largest and most capitalised company in the whole of Africa and, potentially, the most profitable on the entire continent.

The CEO charged employees of the organisation to ensure that the company becomes a commercially viable entity and a multi-billion-dollar company that will continuously deliver value to its shareholders–the over two hundred million Nigerians.

Business Post had reported that President Muhammadu Buhari recently instituted the board of NNPC Limited led by Mrs Margery Chuba Okadigbo, Chairman, Mr Mele Kolo Kyari, Chief Executive Officer, Mr Umar I. Ajiya, Chief Financial Officer, Mr Tajudeen Umar (North East), Mrs Lami O. Ahmed (North Central), Mallam Mohammed Lawal (North West), Mr Henry Obih (South East), Barrister Constance Harry Marshal (South-South), and Mr Pius Akinyelure (South West).

Others included Mr Nasir Sani Gwarzo, Permanent Secretary, Ministry of Petroleum Resources and Mr Aliyu Ahmed, Permanent Secretary, Minister, Finance, Budget and National Planning.

The President charged the board members to enforce the reforms put forward by the Petroleum Industry Act (PIA) 2021, which seeks to reposition the Nigerian petroleum industry to a commercially viable and competitive industry in line with global business dynamics and best practices.

“The Nigerian National Petroleum Company Limited is mandated to focus on profitability and continuous value creation beyond the simple fulfilment of legal and regulatory requirements.

“NNPC Limited is expected to operate at par with its industry peers across the world while acting as Enabler Company that will foster the development of other sectors of our economy,” he said.

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Economy

Gains in NDEP, Nipco Push NASD Exchange 0.25% Higher

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NDEP

By Adedapo Adesanya

The week ended in the positive territory on the floor of the NASD Over-the-Counter (OTC) Securities Exchange following a 0.25 per cent rise on Friday, January 14.

The favourable outcome came on the back of gains recorded by the duo of Niger Delta Exploration and Production (NDEP) Plc and Nipco Plc.

NDEP Plc appreciated by N2.5 or 1.1 per cent during the session to close at N238.00 per unit as against N235.50 per unit it finished at the preceding session, while Nipco Plc improved by N6 or 8.7 per cent to close at N69.00 per unit compared with N63.00 per unit it closed at the previous session.

As a result of the good performances put up by the two stocks, the NASD unlisted security index (NSI) moved up by 1.86 points to 750.02 points from 748.16 points, while market capitalisation gained N1.58 billion to wrap the day at N635.10 billion in contrast to N633.52 billion it closed on Thursday.

There was no price loser during the trading day, through the trading volume slid by 36.9 per cent as a total of 207,618 units of shares exchanged hands compared with 329,347 units transacted on Thursday.

But the trading value rose by 15.6 per cent to N10.7 million from the previous day’s value of N9.3 million, while the number of deals depreciated by 36.4 per cent as only seven deals were carried out compared to the 11 deals executed at the previous session.

Central Securities Clearing Systems (CSCS) Plc remained as the most active stock by volume (year-to-date) as it has traded 1.02 million units of its shares for N19.9 million. Friesland Campina WAMCO Nigeria Plc was in second place for transacting 40,804 units of its stocks valued at N4.8 million, while NDEP Plc was in third place with 28,289 units valued at N6.7 million.

Also, CSCS Plc ended the session as the most traded stock by value with a turnover of 1.0 million units exchanged at N19.9 million, NDEP Plc trailed with 28,289 units worth N6.7 million, while Friesland Campina WAMCO Nigeria Plc has exchanged 40,804 units worth for N4.8 million.

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Economy

28.7% Drop in I&E Turnover Strengthens Naira to N416.00/$1

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Naira BDC Segment

By Adedapo Adesanya

The Naira closed the week stronger against the US Dollar at the Investors and Exporters (I&E) segment of the foreign exchange (forex) market on Friday, January 14.

At the I&E window, the local currency appreciated by 0.06 per cent or 50 kobo to trade at N416.00/$1 as against N416.50/$1 it closed on Thursday.

The strengthening of the local currency happened on the back of a 28.7 per cent or $49.59 million fall in turnover at the market segment as data obtained by Business Post from the FMDQ Securities Exchange showed that transactions worth $123.4 million were carried out compared with the $172.99 million recorded at the previous session.

However, at the interbank window of the market, the Naira recorded a flat outcome against the United States Dollar, closing at N414.79/$1, the same rate of the preceding day.

In the same vein, the domestic currency closed flat against the Pound Sterling on Friday at N565.57/£1 and against the Euro, the exchange rate of the indigenous currency remained intact at N475.22/€1.

Meanwhile, at the cryptocurrency market, six of the 10 digital currencies tracked by the newspaper across several trading platforms appreciated in value.

The highest gainer was Cardano (ADA) as it moved higher by 7.4 per cent to trade at N783.58, Tron (TRX) made a 3.8 per cent gain to sell at N40.46, Litecoin (LTC) improved by 3.5 per cent to trade at N82,485.74, Ripple (XRP) appreciated by 1.8 per cent to sell at N450, Binance Coin (BNB) rose by 0.7 per cent to trade at N205,719.75, while Dogecoin (DOGE) grew by 0.2 per cent to trade at N105.12.

However, Dash (DASH) went down by 1.6 per cent to sell for N80,050.10, Ethereum (ETH) depreciated by 0.5 per cent to sell at N1,896,100.03, the United States Dollar Tether moved down by 0.3 per cent to trade at N783.58, while Bitcoin (BTC) declined by 0.2 per cent to quote at N24,576,842.26.

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