Economy
GCR Affirms Forte Oil Issuer, Bond Ratings At A-(NG)
By Modupe Gbadeyanka
The national scale issuer ratings assigned to Forte Oil Plc of A-(NG) and A1-(NG) in the long term and short term respectively have been affirmed by Global Credit Ratings (GCR) with the outlook accorded as Stable.
Concurrently, the Series 1 Fixed Bond rating has been affirmed at A-(NG) and placed on Stable Outlook. The ratings expire in June 2018.
A statement issued by GCR explained that the ratings were accorded to Forte Oil Plc after taking cognisance of the firm’s top-tier position in the Nigerian downstream petroleum industry, underpinned by a visible brand, significant assets across the value chain, strong relationships with suppliers, experienced management team, as well as an extensive distribution and retail network.
The downstream petroleum industry is heavily reliant on imports, due to low levels of domestic refining. As a result, challenges were heightened by hard currency shortages (which resulted in product scarcity), adverse exchange rate movements and delayed subsidy payments in 2016.
In addition, the harsh economic environment and reduced consumer spending power led to a temporary decline in demand for petrol (following a 67% increase in the pump price in May 2016).
In a bid to reduce exposure to foreign exchange fluctuations, Forte Oil significantly scaled back its refined petroleum product import volumes. As such, FY16 and 1Q FY17 revenue and earnings were significantly below initial forecasts.
Forte Oil’s revenue increased by 19% to N148.6bn in FY16, underpinned by a general price increase across business segments and higher traded lubricant sales volumes. However, the partial cost pass through saw the gross margin decline to 13.9% in FY16, before rebounding to 17.6% in 1Q FY17. Effective cost management and focus on high margin, non-regulated products, saw operating margin increased from 5% in FY15 to 6.3% in FY16 edging up to 9.5% in the 3-month period to March 2017.
The net finance charge spiked to N4.2bn in FY16 (FY15: N1.6bn), due to the impact of Naira devaluation on import finance facilities and higher lending rates. Accordingly, net interest cover reduced to 2.2x in FY16 (FY15: 3.6x), and further to 2x in 1Q FY17.
The N9bn Series 1 Bond Issue and funding raised for the Geregu Power plant overhaul pushed debt up to N49.4bn at FY16. Coupled with a reduction in distributable reserves (following a dividend payment), this drove net gearing up to 75% at FY16 and 80% at 1Q FY17.
Positively, net debt to EBITDA improved to a respective 263% and 209% at FY16 and 1Q FY17, albeit behind target.
Forte Oil plans to raise additional capital of N20bn equity during 3Q 2017. Following the equity raise, management anticipates net gearing to reduce below 35% at FYE17 and FYE18 respectively, while net debt to EBITDA is projected to register around 100% for both years.
Despite the downstream petroleum industry challenges, prospects are enhanced by a strong baseline of demand, on the back of the country’s large urban population and heavy vehicular traffic.
In addition, the completion of Dangote Group’s 650,000bbl/d refinery (set for 2019), is expected to materially reduce the dependence on imports, with the Ministry of Petroleum projecting the cessation of fuel importation once the plant is at full capacity.
Forte Oil plans to expand its retail network and diversify its non-fuel revenue streams with strong local and international brands. In this regard, the power generation business had increased capacity utilisation to 100% by 1H FY17 (1H FY16: 35%) and should contribute materially to earnings in the medium term.
The Group also anticipates a rebound in the upstream oil and gas services business on the back of broader economic recovery in the medium term, and thus plans to expand service offerings.
Sustainable margin enhancement, on the back of the materialisation of current business plans could result in positive rating action if it translates to stronger credit protection metrics in the medium term.
Conversely, adverse regulatory/policy changes, or other external factors could adversely affect earnings and result in liquidity strain and/or increased gearing metrics, placing downward pressure on the ratings. In addition, sustained increase in debt levels and gearing metrics would lead to negative rating action
As the Series 1 Fixed Rate Bond is a senior unsecured obligation of the Issuer, the Bonds will bear the same rating as the Issuer, and any change in the rating assigned to the Issuer will directly affect the Bond rating.
By Aduragbemi Omiyale
The board of Neimeth International Pharmaceuticals Plc can raise an additional N30 billion from the capital market, shareholders have declared.
They gave the authorisation for this fresh capital raise at the company’s 67th Annual General Meeting (AGM) held virtually on Thursday, June 25, 2026.
This was one of the resolutions passed at the yearly shareholders’ gathering, attended by several persons, including board and management members as well as investors and others.
The approval for new capital raise is coming after the board was, on June 23, 2025, authorised to raise up to N20.0 billion. For this tranche, only N2.440 billion was raised by the organisation, leaving an untilised balance of approximately N17.560 billion.
The company has now been given the authority to get fresh N30.0 billion, according to disclosure from Neimeth.
In the notice to the Nigerian Exchange (NGX) Limited, Neimeth said the board was asked to “raise additional capital of up to N30.0 billion through an issuance of shares (to be issued, whether by way of public offering, rights issue, private/special placement to strategic or identified investors), commercial papers, bonds, convertible and non-convertible securities), medium term notes and/or any other instruments, either as a stand-alone or by way of programmes, in such tranches, series or proportions, at such coupon or interest rates, within such maturity periods, or on such terms and conditions, through a combination of methods or processes, all of which shall be based on terms and conditions to be determined by the board and subject to obtaining the approvals of the relevant regulatory authorities.”
The shareholders resolved that “the aggregate shareholders’ approval for capital raising shall accordingly be N50.0 billion, of which approximately N2.440 billion has already been raised by way of rights issue, leaving an unutilised balance of approximately N47.560 billion available for raising.”
By Adedapo Adesanya
The duo of FrieslandCampina Wamco Nigeria Plc and Food Concepts Plc helped root the NASD Over-the-Counter (OTC) Securities Exchange in negative territory, following a 0.36 per cent slide on Monday, June 29.
FrieslandCampina, which is the maker of milk brands Peak Milk and Three Crowns, lost N13.44 to trade at N141.76 per unit compared with its previous price of N155.2o per unit, while Food Concepts, which is the parent company of fast food giant Chicken Republic, declined by 8 Kobo to end at N2.43 per share versus last Friday’s price of N2.51 per share.
Consequently, the NASD Security Index (NSI) slid by 15.51 points to 4,261.56 points from 4,277.07 points, and the market capitalisation lost N9.31 billion to close at N2.557 trillion compared with the previous value of N2.567 trillion.
The bourse finished with two price advancers yesterday, with Central Securities Clearing System (CSCS) Plc up by N3.80 to trade at N88.48 per unit versus N84.68 per unit, and Nitrox Industrial Gases Plc gaining 31 Kobo to end at N21.40 per share versus N21.09 per share.
The volume of securities traded by investors on the first trading day of the week contracted by 75.9 per cent to 229,314 units from the previous 955,096 units, and the value of securities slumped 17.8 per cent to N24.6 million from N29.9 million, while the number of deals increased by 9.7 per cent to 34 deals from the 31 deals recorded last Friday.
At the close of trades, Great Nigeria Insurance (GNI) Plc was the most traded stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 68.7 million units transacted for N4.7 billion.
GNI Plc also closed the day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc followed with 1.1 billion units traded for N415.7 million
By Adedapo Adesanya
The value of the Naira crashed against the United States Dollar by N2.70 0r 0.2 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, June 29, to N1,383.63/$1 from last Friday’s exchange rate of N1,380.93/$1.
This was influenced by FX pressure on the domestic currency, which also weakened its exchange rate against the Pound Sterling in the same market segment during the session by N6.06 to N1,831.64/£1 from the previous value of N1,824.90/£1. It also depleted the Nigerian currency against the Euro by 45 Kobo, trading at N1,578.03/€1 versus the preceding session’s N1,577.58/€1.
However, it maintained stability against the greenback at the parallel market and the GTBank forex desk yesterday at N1,395/$1 and N1,387/$1, respectively.
Despite the pressure on the Naira, it is still trading within the expected range, as a result of ongoing FX reforms, stronger market liquidity, and increased transparency in the FX market.
Unlike in previous years, the improved stability is reflected in the relatively narrow spread between the official exchange rate and rates in the Bureau de Change (BDC) segment, suggesting that reforms introduced by the Central Bank of Nigeria (CBN) are helping to improve price discovery and reduce distortions.
Also, Nigeria’s external reserves, which provide the apex bank with the capacity to support the Naira and meet the country’s external obligations, have continued to trend upward. Most recent data published on the apex bank’s website showed that reserves rose to $51.29 billion as of June 26, 2026.
In the cryptocurrency market, Bitcoin (BTC) lost momentum after it dropped below $60,000, remaining under its 200-week moving average as currency markets swung following the Japanese Yen slipping to four-decade lows against the US Dollar.
Strategy, the largest public holder of bitcoin, plans to sell more than $1 billion of BTC as part of a $1.25 billion monetisation program, a sharp break from Michael Saylor’s long-held “never sell” stance. BTC traded at $59,463.89.
Dogecoin (DOGE) went down by 0.9 per cent to $0.0723, TRON (TRX) slipped by 0.8 per cent to $0.3196, Cardano (ADA) dipped 0.2 per cent to $0.1446, and Ripple (XRP) dropped 0.1 per cent to close at $1.04.
On the flip side, Solana (SOL) gained 2.5 per cent to sell at $73.99, Ethereum (ETH) improved by 0.4 per cent to $1,587.51, and Binance Coin (BNB) added 0.01 per cent to sell for $552.58, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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