Economy
Fitch Drops Seven Energy to ‘RD’
By Modupe Gbadeyanka
The Long-Term Issuer Default Rating of Nigeria-based Seven Energy International Limited has been downgraded to ‘RD’ from ‘C’ by Fitch Ratings.
This followed Seven Energy’s announcement that the 30-day grace period has expired for the cash interest payment the firm missed on its $300 million secured notes and $100 million notes due 2021.
It was gathered that the company could not meet the conditions for the interest capitalisation.
The expiration of the grace period was an event of default under the notes’ terms.
However, Seven Energy is holding talks with its creditors to agree a standstill on its debt service obligations.
The company is also discussing a comprehensive financial restructuring with its existing and potential lenders and investors.
According to Fitch, it simultaneously affirmed the wholly owned subsidiary Seven Energy Finance Limited’s $300 million 10.25 percent senior secured notes due 2021 at ‘C’ with an ‘RR6’ Recovery Rating.
All Seven Energy’s oil liftings from oil mining licences (OMLs) 4, 38 and 41 under the strategic alliance agreement (SAA) with the state-owned Nigerian Petroleum Development Company Limited (NPDC) have stopped since February 2016, as the Forcados oil pipeline and terminal remain shut due to the threat of militant attacks.
Earlier in 2017, Seven Energy announced that NPDC intends to terminate the SAA unless the company meets outstanding cash calls. Seven Energy has taken steps to preserve its contractual rights under the SAA, but there is a risk that this once key cash-generating asset will remain largely unavailable.
Near-term cash flows from the company’s gas business remain weak as sale volumes are volatile and the company’s major gas off-takers, Nigerian state-owned power stations, delay payments for consumed gas.
In April 2017, Seven Energy reported delays in finalisation and effectiveness of the World Bank partial risk guarantee (PRG), which is meant to compensate Seven Energy for up to $112 million of gas supply invoices to Calabar power station, its principal gas off-taker.
The company currently expects the PRG to be finalised soon, after approval from the Nigerian authorities is obtained and the PRG could be called 90 days after its finalisation. Finalisation of the PRG would be positive, but we do not expect it to materially improve the overall payment discipline for Seven Energy’s gas business.
Longer term, the natural gas business in Nigeria’s southeast is an important growth driver for Seven Energy, which is on track to ramp up gas sales to over 150 million cubic feet per day.
Following the completion of the power grid, local power stations including Calabar can now run at full capacity. On the other hand, power stations continue suffering from stretched liquidity and poor receivables collection, and are delaying their payments to the company.
Seven Energy’s midstream gas infrastructure assets are fully ring-fenced and serve as security for the company’s $385 million Accugas loan.
There is a risk that the Accugas lenders may decide to enforce the security on the gas assets, stripping the company of its presently main cash-generating asset and effectively forcing it into liquidation.
Seven Energy’s natural gas revenues are US-dollar pegged but are received in Naira. Nigerian companies, including Seven Energy, are facing difficulties exchanging Naira into US Dollars, which the company needs to service its US-dollar debt, at the official exchange rate.
To alleviate the problem, the company is currently negotiating with lenders to convert the Accugas facility into naira and extend its maturity. The naira convertibility issue negatively affects the company’s liquidity as long as Forcados remains shut, as the company receives little US dollar revenue from its other operations.
By Dipo Olowookere
The bears consolidated their dominance on the Nigerian Exchange (NGX) Limited on Wednesday, inflicting an additional 0.09 per cent cut on the market.
At midweek, the market capitalisation of the domestic stock exchange went down by N73 billion to N124.754 trillion from the preceding day’s N124.827 trillion, and the All-Share Index (ASI) slipped by 114.32 points to 194,370.20 points from 194,484.52 points.
A look at the sectoral performance showed that only the consumer goods index closed in green, gaining 1.19 per cent due to buying pressure.
However, sustained profit-taking weakened the insurance space by 3.79 per cent, the banking index slumped by 2.07 per cent, the energy counter went down by 0.24 per cent, and the industrial goods sector shrank by 0.22 per cent.
Business Post reports that 25 equities ended on the gainers’ chart, and 54 equities finished on the losers’ table, representing a negative market breadth index and weak investor sentiment.
RT Briscoe lost 10.00 per cent to sell for N10.35, ABC Transport crashed by 10.00 per cent to N6.75, SAHCO depreciated by 9.98 per cent to N139.35, Haldane McCall gave up 9.93 per cent to trade at N3.99, and Vitafoam Nigeria decreased by 9.93 per cent to N112.50.
Conversely, Jaiz Bank gained 9.95 per cent to settle at N14.03, Okomu Oil appreciated by 9.93 per cent to N1,765.00, Trans-nationwide Express chalked up 9.77 per cent to close at N2.36, Fortis Global Insurance moved up by 9.72 per cent to 79 Kobo, and Champion Breweries rose by 5.39 per cent to N17.60.
Yesterday, 1.4 billion shares worth N46.2 billion were transacted in 70,222 deals compared with the 1.1 billion shares valued at N53.4 billion traded in 72,218 deals a day earlier, implying a rise in the trading volume by 27.27 per cent, and a decline in the trading value and number of deals by 13.48 per cent and 2.76 per cent, respectively.
Fortis Global Insurance ended the session as the busiest stock after trading 193.7 million units for N152.7 million, Zenith Bank transacted 120.7 million units worth N11.1 billion, Japaul exchanged 114.8 million units valued at N407.0 million, Ellah Lakes sold 98.4 million units worth N999.2 million, and Access Holdings traded 63.1 million units valued at N1.7 billion.
By Adedapo Adesanya
A 74 Kobo or 0.05 per cent decline was recorded by the Naira against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, February 25, trading at N1,356.11/$1 compared with the N1,355.37/$1 it was traded on Tuesday.
The Nigerian currency also further depreciated against the Pound Sterling during the session in the official market by N6.70 to settle at N1,834.96/£1 versus the preceding day’s rate of N1,828.26/£1, and against the Euro, it tumbled by N4.94 to quote at N1,598.59/€1 compared with the previous session’s N1,596.36/€1.
In the same vein, the Nigerian Naira lost N6 against the Dollar at the GTBank forex desk to close at N1,367/$1, in contrast to N1,361/$1 it was exchanged a day earlier, and in the parallel market, it traded flat at N1,365/$1.
The continuation of the decline of the local currency has been tied to the Central Bank of Nigeria (CBN) buying US Dollars from the market to slow the rapid rise of the Naira.
The apex bank bought about $189.80 million to reduce excess Dollar supply and control how fast the Naira was gaining value.
The monetary policy committee (MPC) of the CBN on Tuesday reduced interest rates by 50 basis points to 26.50 per cent from 27 per cent after inflation eased in January 2026, a move analysts say is the best not to unsettle FX market, especially the Foreign Portfolio Investors (FPI_ inflows which have anchored much of the recent supply and weakened the recently restored monetary credibility.
“The 50bps move therefore provides a clear directional signal while still keeping overall monetary conditions restrictive, indicating the start of a shallow, data-dependent easing cycle rather than a radical shift to accommodative policy,” said Mr Kayode Akindele, CEO, Coronation Capital and Head, Coronation Research in an email.
As for the cryptocurrency market, benchmarked tokens rebounded in double digits, driven by bearish positioning and thin liquidity rather than by clear fundamental catalysts, with Cardano (ADA) growing by 16.2 per cent to $0.3015, and Solana (SOL) appreciating by 12.3 per cent to $88.66.
Further, Ethereum (ETH) surged 11.9 per cent to $2,076.66, Litecoin (LTC) expanded by 11.5 per cent to $57.15, Dogecoin (DOGE) rose by 11.5 per cent to $0.1025, Binance Coin (BNB) advanced by 7.6 per cent to $629.76, Ripple (XRP) jumped 7.2 per cent to $1.45, and Bitcoin (BTC) added 6.4 per cent to sell for $68,136.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
Oil prices settled largely unchanged on Wednesday amid a build in American crude stockpile and the threat to oil supply from potential military conflict between the US and Iran.
Brent futures chalked up 8 cents to trade at $70.85 a barrel, while the US West Texas Intermediate (WTI) futures settled lost 21 cents to close at $65.42 per barrel.
Crude oil inventories in the US increased by 16 million barrels during the week ending February 20, according to new data from the US Energy Information Administration (EIA) released on Wednesday.
The decrease brings commercial stockpiles to 435.8 million barrels according to government data, which is still 3% below the five-year average for this time of year.
The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories rose by a massive 11.4 million barrels in the period.
The market continued to weigh the possibility extended conflict could disrupt supplies from Iran, the third-biggest crude producer in the Organisation of the Petroleum Exporting Countries (OPEC) and other countries in the Middle East.
US President Donald Trump verbally attacked Iran, saying he would not allow a country he described as the world’s biggest sponsor of terrorism to have a nuclear weapon.
This comes as US envoys are due to meet an Iranian delegation for a third round of talks on Thursday in Geneva, Switzerland.
Reuters reported that OPEC+ is considering raising its oil output by 137,000 barrels per day for April to end a three-month pause in production increases. This is as the group prepares for peak summer demand and tensions between the US and Iran boost prices.
Eight OPEC+ producers – Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria and Oman – meet on March 1.
An increase of 137,000 barrels per day for April would be the same as those agreed for December, November and October last year.
In a separate development, Saudi Arabia has activated a plan for a short-term oil output and export surge in case a US strike on Iran disrupts flows from the Middle East, said two sources familiar with the Saudi plan.
Tariff uncertainty also further worried investors after President Trump’s temporary global tariff of 10 per cent took effect on Tuesday after the Supreme Court’s sweeping ruling last week. He later said the levy would be 15 per cent, but it was unclear when and if it would apply.
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