Economy
FG to Sell $2.5b Eurobond in October to Fund 2017 Budget
By Modupe Gbadeyanka
Next month, Nigeria plans to sell $2.5 billion Eurobond and proceeds from the sale would be used to fund the 2017 budget, Bloomberg reports.
Also, after the October Eurobond sale, the Federal Government will issue another $3 billion Eurobond before the end of the year, the reputable media outfit added.
This would bring to $7 billion the country has sold this year alone.
Here is the Bloomberg report
Nigeria plans to sell as much as $5.5 billion of Eurobonds in the next three months to fund capital projects and replace local-currency debt, according to the Debt Management Office. Yields on existing bonds rose to the highest in two months.
The new offers would bring the amount raised through Eurobond sales by Africa’s most-populous nation this year to more than $7 billion as President Muhammadu Buhari’s administration restructures its debt portfolio to almost double the portion of foreign borrowing in a bid to reduce financing costs.
The government wants to raise $2.5 billion in October to help fund 2017’s 7.4 trillion-naira ($20.8 billion) budget, the biggest yet, DMO Director-General Patience Oniha said on Wednesday in an interview in the capital, Abuja. It will sell the remaining $3 billion before the end of the year to replace naira-denominated debt, she said.
The government’s advisers “have told us the market is waiting,” Oniha said. “Work is already ongoing and we are just waiting for a resolution from the National Assembly to proceed.”
The yield on Nigeria’s $500 million of Eurobonds due July 2023 rose four basis points by 1:26 p.m. in London, extending Wednesday’s 15 basis-point climb, to 5.49 percent, the highest since Aug. 21. That on the nation’s dollar securities due in 2032 increased six basis points to 6.91 percent, the highest since July 18.
Citigroup Inc. and Standard Chartered Plc, which helped Nigeria sell bonds this year, will be retained as bookrunners for the $2.5 billion, and are in talks with the government to also lead the $3 billion sale, Oniha said.
Increase Proportion
Nigeria’s overall foreign debt, which includes funds from partners and the Export-Import Bank of China, stood at $15.1 billion as of June 30, while domestic debt was 14.1 trillion naira, the National Bureau of Statistics said on Sept. 19. The government wants to increase the proportion of foreign borrowing to 40 percent of total debt stock from under 30 percent currently, Oniha said.
“That will reduce the government’s borrowing costs,” she said. There is an almost 10 percentage-point spread between domestic and foreign borrowing costs and the restructuring debt plan will help save the government hundreds of million dollars in financing costs, Oniha said.
Nigeria’s Eurobonds yield an average 6 percent, compared with about 16 percent for its naira debt, according to Bloomberg indexes
The Monetary Policy Committee on Sept. 26 left its key interest rate at a record high of 14 percent, where it’s been for more than a year, to fight inflation that’s almost double the target and maintain hard-won stability in exchange rates, Governor Godwin Emefiele said. In the second quarter, the economy emerged from a 2016 slump, the deepest in more than a quarter of a century, with gross domestic product rising 0.6 percent from a year earlier.
High domestic borrowing costs are also forcing the DMO to reduce the maturity of naira debt it plans to sell so that it doesn’t lock in unfavorable interest payments over a longer period, Oniha said. “That will be reflected in our next-quarter calendar for bonds,” Oniha said. The government will instead push for more than 15-year tenure on dollar-denominated securities, she said.
“The good news about this is that Nigeria has the capacity to borrow more from the international capital market given improving fundamentals and its relatively low external debt levels, around 4-5 percent of gross domestic product,” Gaimin Nonyane, the London-based economic-research head at Ecobank International Group, said. “Some of these funds are likely to be used to finance the 2018 maturing debt of $500 million.”
While Nigeria’s debt to GDP ratio is among the lowest in Africa, its interest payments-to-revenue ratio doubled last year to 66 percent of revenue, according to the International Monetary Fund.
The government is looking to plug a 2017 budget deficit that it forecast at 2.3 trillion naira, or 2.2 percent of GDP following a revenue shortfall caused by the decline of output and price of oil, its main export. About one-third of this year’s budget will be invested in new roads, rail, ports and power as part of a wider plan to help the economy recover from a 1.6 percent contraction last year, boost growth to 7 percent, and create 15 million jobs by 2020.
Source: Bloomberg
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.
On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.
Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.
Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.
At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.
The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.
Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.
In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.
At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.
Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).
Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Dipo Olowookere
For the fourth consecutive trading session, the Nigerian Exchange (NGX) Limited closed higher on Friday by 0.63 per cent on sustained renewed buying pressure.
Apart from the energy and industrial goods sectors which closed flat, every other sector ended in the green territory, according to data obtained from the bourse.
Business Post reports that the insurance index appreciated by 1.52 per cent, the banking space improved by 0.63 per cent, and the consumer goods counter expanded by 0.46 per cent.
As a result, the All-Share Index (ASI) gained 617.47 points to settle at 99,378.06 points compared with the preceding day’s 98,760.59 points and the market capitalisation went up by 375 billion to close at N60.242 trillion, in contrast to Thursday’s closing value of N59.867 trillion.
The volume of transactions on Customs Street yesterday grew by 11.13 per cent to 544.2 million shares from the 489.7 million shares transacted a day earlier.
The value of transactions increased during the session by 49.30 per cent to N10.6 billion from N7.1 billion and the number of deals went up by 1.93 per cent to 8,464 deals from the 8,304 deals posted in the previous trading session.
The busiest equity for the trading day was Japaul with the sale of 71.7 million units valued at N158.0 million, eTranzact exchanged 70.7 million units worth N477.5 million, Tantalizers sold 57.3 million units for N101.2 million, FCMB traded 33.0 million units worth N297.3 million, and Universal Insurance transacted 27.1 million units valued at N9.6 million.
A total of 36 stocks ended on the gainers’ chart, while 15 stocks finished on the losers’ table, indicating a positive market breadth index and strong investor sentiment.
The trio of Aradel Holdings, Ikeja Hotel and Caverton gained 10.00 per cent each to trade at N550.00, N8.80, and N1.98, respectively, as Africa Prudential rose by 9.87 per cent to N17.25 and Golden Guinea Breweries soared by 9.64 per cent to N8.64.
On the flip side, Austin Laz lost 10.00 per cent to close at N1.62, ABC Transport crashed by 8.00 per cent to N1.15, Royal Exchange slumped by 7.69 per cent to 60 Kobo, Secure Electronic Technology plunged by 5.26 per cent to 54 Kobo, and The Initiates crumbled by 4.26 per cent to N2.25.
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