Economy

GCR Assigns BBB(NG), A2(NG) Ratings to Eterna

Published

8 years ago

04/08/2018

By Dipo Olowookere

The long term and short term national scale Issuer ratings of BBB(NG) and A2(NG) respectively have been assigned to Eterna by Global Credit Ratings (GCR).

Eterna Plc is an integrated energy company with operations focussed on the downstream sector of the oil and gas industry.

Although, Eterna has a relatively small market share for petroleum products, its significant assets across the value chain (including storage facilities and a lubes plant) positions it well to take advantage of opportunities in the industry.

Eterna also leverages upon extensive technical expertise, linkages with well-established international partners, and off-take arrangements with big corporates and oil exploration companies.

Notwithstanding the potential for profit enhancement, GCR said it considers crude trading operation to be highly risky. The volumes and debt funding required to facilitate the business are very large, while the thin margin does not provide any headroom for unexpected delays or oil price volatility.

The rating firm said although, revenue from the retail and lubricant segments are lower, earning streams are more predictable, helping to reduce risk, with the higher margins serving to bolster sustainable earnings.

Furthermore, the network of fuel retail outlets (about 19), combined with the blending capacity in the Lubricant and Chemical segment present less risky opportunities for sustainable growth.

According to GCR, while margins in fuel retail are also thin, due to government regulations, there are opportunities to increase profitability through an improved service offering and economies of scale.

It noted that given the higher margin potential, Eterna plans to expand the retail and distributor network to increase accessibility to lubricants across the country.

Despite the volatility caused by trading activities and crude prices, as evidenced by the spike in the operating margin in FY16 and the decline in FY17, Eterna has steadily increased its scale, with operating profit having doubled between FY13 and FY17.

In this regard, the company has maintained sufficient funding facilities to cover trading and inventory requirements even under stressed scenarios. In this regard, trade credit facilities totalling $500 million have been secured from some leading banks. Up to N10 billion (around $25 million) has been drawn at a given time to import inventories, only a small portion of the available lines.

Nevertheless, having multiple lines with the different banks is important to ensure that Eterna is able to obtain the most competitive rates, while some of the credit facilities also serve as enhancements to secured contracts.

GCR said the retention of earnings has facilitated strong cash accumulation, with cash holdings increasing to a high N7.1 billion at FY16. Accordingly the company has been able to fund a portion of working capital requirements internally, thus maintaining gearing metrics at moderate levels.

Thus, net gearing registered at 27 percent at FY17, from an ungeared position previously. In addition, net interest coverage has been strong over the review period.

The rating agency said positive rating action is likely on attainment of targeted volume growth in all product segments (especially in the retail, chemical and lubricant segment), combined with effective cost management, resulting in improved earnings margins and stronger credit protection metrics.

Conversely, excessive gearing, even to fund profitable transactions, could result in a downgrade. This is particularly true in light of the vagaries of oil market environment and general operating environment, which could materially impact earnings and lead to liquidity strain and debt service challenges.

Economy

Customs Street Surges 0.28% Despite Persistent Weak Sentiment

Published

16 minutes ago

09/04/2026

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited rallied by 0.28 per cent on Wednesday despite weak investor sentiment, as the bourse ended with 18 price gainers and 38 price losers, implying a negative market breadth index.

The growth recorded yesterday by Customs Street was influenced by the 2.11 per cent rise posted by the energy index, and the 1.79 per cent jump achieved by the banking sector.

The other sectors experienced profit-taking, with the consumer goods losing 1.07 per cent, the insurance counter down by 0.36 per cent, and the industrial goods space down by 0.19 per cent.

Universal Insurance chalked up 10.00 per cent to sell for N1.21, Omatek improved by 9.78 per cent to N2.47, VFD Group expanded by 9.71 per cent to N11.30, CWG appreciated by 9.64 per cent to N21.05, and Livestock Feeds gained 9.56 per cent to close at N7.45.

On the flip side, UPDC REIT lost 10.00 per cent to settle at N6.75, Fortis Global Insurance shed 9.92 per cent to quote at N1.18, Deap Capital depreciated by 9.85 per cent to N5.40, Chams went down by 9.47 per cent to N3.06, and Japaul declined by 8.82 per cent to N3.10.

Yesterday, the All-Share Index (ASI) went up by 562.43 points to 202,585.53 points from 202,023.10 points, and the market capitalisation advanced by N389 billion to N130.404 trillion from N130.015 trillion.

During the session, 1.0 billion stocks worth N40.6 billion exchanged hands in 52,723 deals compared with the 1.1 billion stocks valued at N40.3 billion executed in 78,006 deals a day earlier, indicating an uptick in the trading value by 0.74 per cent, and a shortfall in the trading volume and number of deals by 9.09 per cent and 32.41 per cent apiece.

The activity chart was led by Access Holdings, which sold 233.0 million units valued at N6.1 billion, Fidelity Bank exchanged 113.1 million units worth N2.2 billion, Wema Bank recorded a turnover of 103.3 million units valued at N2.7 billion, Zenith Bank transacted 60.6 million units for N6.5 billion, and Chams traded 47.5 million units worth N154.6 million.

Economy

Crude Oil Slumps Amid Hopes of Strait of Hormuz Reopening

Published

47 minutes ago

09/04/2026

Adedapo Adesanya

By Adedapo Adesanya

Crude oil plummeted on Wednesday on hopes of the reopening of the Strait of Hormuz after US President Donald Trump agreed to a two-week ceasefire with Iran.

Brent crude futures moderated to $94.75 a barrel, while the US West Texas Intermediate (WTI) crude eased to $94.41 a barrel.

President Trump said on Wednesday that the US will work closely with Iran and will be talking about tariff and sanctions relief with Iran.

However, analysts cautioned that the ceasefire is a temporary two-week reprieve rather than a permanent resolution, and the global energy system remains fragile due to structural damage to regional infrastructure.

Reuters reported that Iran could open the strait in a limited and controlled way on Thursday or Friday ahead of a meeting between U.S. and Iranian officials in Pakistan.

Agence France-Presse (AFP) reported that two ships appeared to have transited the Strait of Hormuz since the US-Iran ceasefire deal. A Greek-owned bulk carrier and a Liberia-flagged vessel both transited the waterway early on Wednesday.

Meanwhile, Israel carried out its heaviest strikes on Lebanon since the conflict with Hezbollah broke out last month, even as the Iran-aligned group paused attacks on northern Israel and Israeli troops in Lebanon under the ceasefire.

Also, Saudi Arabia’s East-West Pipeline, a critical artery bypassing the Strait of Hormuz, was reportedly hit in an Iranian drone attack. Prior to the attack, the pipeline was pumping at its emergency capacity of 7 million barrels per day to bypass the shuttered strait.

The strikes occurred just hours after a US-Iran ceasefire announcement, which has so far failed to halt regional hostilities. Other facilities in the kingdom were also targeted in the wave of strikes, which the Islamic Revolutionary Guard Corps (IRGC) claimed included oil facilities owned by American companies in Yanbu.

US crude stocks rose by 3.1 million barrels to 464.7 million barrels during the week ended April 3, the Energy Information Administration (EIA) said.

Economy

Insurance Firms Must Submit 2025 Assessment Returns by May 31—NAICOM

Published

18 hours ago

08/04/2026

Adedapo Adesanya

By Adedapo Adesanya

The National Insurance Commission has issued new guidelines for the collection, management, and administration of the Insurance Policyholders’ Protection Fund.

In a circular issued to all insurance institutions on Tuesday, the regulator also set May 31, 2026, as the deadline for insurers to submit their assessment returns for the 2025 financial year.

Recall that on August  5, 2025,  President Bola Tinubu signed  into  law  the  Nigerian  Insurance  Industry Reform  Act ( NIIRA 2025).

 This  landmark legislation  repeals  the  Insurance  Act  2003,  and  consolidates  related  provisions,  ushering  in  a  modern regulatory framework. It lays a strong foundation for sustainable growth and increased investment in the country’s insurance sector.

The commission said the guidelines were issued in exercise of its powers under the 2025 Act and other existing insurance laws and regulations to provide regulatory clarity, improve guidance, and ensure ease of compliance across the industry.

According to NAICOM, the guidelines establish a comprehensive structure for the operation of the IPPF, which serves as a statutory safety net to protect insurance policyholders in the event of distress or insolvency of a licensed insurer or reinsurer. The framework also provides direction on the reimbursement of loans by insurers and reinsurers.

NAICOM stated, “The guidelines ensure regulatory clarity, guidance and ease of compliance, as it provides a comprehensive regulatory framework for the collection, management, and administration of the Fund, which serves as a statutory safety net designed to protect insurance policyholders against distress and insolvency of a licensed insurer or reinsurer, including guidance for the reimbursement of loans by an insurer or reinsurer.

“Please be informed that the IPPF Assessment Returns in respect of the year 2025 shall be submitted to the Commission not later than 31st May 2026, while subsequent submissions shall be in line with Section 4.3 of the Guideline on Insurance Policyholders Protection Fund.”