By Aduragbemi Omiyale
Nigeria’s rating has been downgraded to B3 from B2 by Moody’s Investors Service due to a “significant deterioration” in the country’s revenue despite an improvement in crude oil prices, the nation’s main source of earnings.
In a rating report released on Friday, the agency said the downgrade affects Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings.
The firm also said it had placed the ratings on review for downgrade.
“Concurrently, Moody’s downgraded Nigeria’s foreign currency senior unsecured MTN rating to (P)B3 from (P)B2, also and placed it on review for downgrade,” the report obtained by Business Post stated.
Moody’s said the initiation of the review for downgrade is prompted by the risk that the ongoing fiscal and external deterioration accelerates, further weakening the government’s capacity to service debt and thereby increasing its risk of default.
The company said the sharp fall in revenue would exert more pressure on the sovereign credit profile of the country, which prides itself as the largest economy in Africa despite a strong increase in international crude oil prices in 2022.
“Moody’s assessment is that these developments are partly the result of weak governance and likely to last. The steep fall in oil production in 2022 and the extension of the expensive oil subsidy have almost entirely eroded the boost to government revenue and exports that would otherwise have been anticipated from higher oil prices.
“Policy levers available to manage weaker oil revenue and rising borrowing costs amid monetary tightening in Nigeria and globally are limited. Similarly, on the external front, the capacity of the Central Bank of Nigeria (CBN) to protect foreign exchange reserves from external outflows has its limits,” the report said.
Concurrently, Moody’s has lowered Nigeria’s local currency (LC) and foreign currency (FC) country ceilings to B1 and B3, respectively, from Ba3 and B2.
But it noted that while it reviews the rating, it would focus on understanding the Nigerian authorities’ strategy to address both domestic and external pressure and assessing the associated default risk for the government’s private creditors.
It expressed concerns over the comments made by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, last week that the federal government would consider restructuring the debts by seeking a repayment extension, including through potential bond buybacks or exchanges, which Moody’s said could “constitute a distressed exchange” under its default definition.
Honeywell Flour, MTN, Others Pull Market Back by 0.01%
By Dipo Olowookere
The depreciation printed by the shares of Honeywell Flour, MTN Nigeria, Ecobank and 10 others pulled back the Nigerian Exchange (NGX) Limited from the bulls’ territory into the danger zone by 0.01 per cent on Thursday.
It was the first trading session in December, and the stock market could not sustain the positive moment it recorded on the last day of the previous month due to the selling pressure on the equities mentioned above, though investor sentiment remained strong.
According to data from the bourse, the market breadth was positive yesterday as there were 15 price advancers and 13 price decliners led by Honeywell Flour, which dropped 7.89 per cent to trade at N2.10. RT Briscoe went down by 7.41 per cent to 25 Kobo, Wema Bank declined by 5.45 per cent to N3.12, FCMB contracted by 4.18 per cent to N3.21, and Cutix retreated by 2.84 per cent to N2.05.
On top of the gainers’ log was UPDC REIT, which improved its share value by 9.09 per cent to N3.00, McNichols rose by 8.93 per cent to 61 Kobo, Japaul jumped by 7.41 per cent to 29 Kobo, Nigerian Breweries 7.14 per cent to N45.00, and Royal Exchange grew by 4.76 per cent to 66 Kobo.
Yesterday, investors transacted 172.9 million shares valued at N2.8 billion in 3,073 deals compared with the 107.0 million shares valued at N1.3 billion traded in 3,227 deals in the midweek session, representing a decline in the number of deals by 4.77 per cent, an increase in the trading volume by 61.55 per cent, and a surge in the trading value by 115.63 per cent.
The increase in the market turnover was driven by the 49.8 million shares of FCMB traded by investors during the session. Courteville traded 16.9 million stocks, Access Holdings sold 12.0 million equities, UBA traded 10.8 million shares, and Zenith Bank exchanged 9.8 million shares.
Business Post reports that the insurance and energy counters went down by 0.12 per cent and 0.08 per cent, respectively, while the banking and consumer goods sectors went up by 2.16 per cent and 0.77 per cent apiece, with the industrial goods space closing flat.
At the close of trades, the All-Share Index (ASI) receded by 3.40 points to 47,656.64 points from 47,660.04 points, and the market capitalisation retreated by N2 billion to N25.957 trillion from N25.959 trillion.
Ecobank Q3 Earnings Swell Amid 12% Jump in Non-Interest Income
By Dipo Olowookere
In the third quarter of 2022, Ecobank Transnational Incorporated (ETI) improved its gross earnings by 11 per cent to N761.3 billion from N686.8 billion in the same period of last year, with interest income growing by 9 per cent to N485.8 billion from N445.1 billion, and interest expense surging by 8 per cent to N174.2 billion from N160.7 billion.
In the period under consideration, fee and commission income expanded by 15 per cent to N165.5 billion from N144.0 billion, driven by higher cash management and related fees, as well as more card management fees, which offset the shortfall in other fees and portfolio and other management fees.
Business Post reports that bank charges, brokerage fees paid, and other fees paid by the lender triggered a 41 per cent increase in the fee and commission expense by Ecobank in the first nine months of this year to N21.0 billion from N14.9 billion.
The trading income generated by the bank grew to N93.2 billion in Q3 of 2022 from N85.5 billion in Q2 of 2021, other operating income rose to N16.7 billion from N11.6 billion, but the net investment income declined to N4.4 billion from N5.6 billion.
In the first nine months of 2022, Ecobank improved its non-interest income by 12 per cent to N258.7 billion from N231.7 billion, while operating income jumped by 11 per cent to N570.4 billion from N516.2 billion.
In the period under consideration, the operating costs of the company increased by 7 per cent to N320.9 billion from N300.7 billion, with personnel costs rising to N138.6 billion from N132.4 billion.
The bank, in the financial statements filed to the Nigerian Exchange (NGX) Limited, said its pre-tax profit improved by 17 per cent to N168.7 billion from N143.7 billion, while the post-tax profit gained 12 per cent to N1177.4 billion from N104.5 billion.
On a year-to-date basis, its loans disbursement to customers was marginally down to N4.03 trillion from N4.06 trillion in FY 2021, while deposits from customers went down to N8.06 trillion from N8.36 trillion.
NGX Helps Governments, Corporates Secure N3.5trn Debts
By Aduragbemi Omiyale
Debt instruments worth N3.5 trillion have been raised from the capital market in 2022 with the assistance of the Nigerian Exchange (NGX) Limited.
These funds were secured by the federal, state governments, and corporate organisations through the issuance of bonds and commercial papers, with the proceeds used to finance projects and business operations.
The NGX has always provided an avenue for organisations to seek cheap capital from investors by positioning itself as the prime location for raising funds.
According to the Divisional Head of Capital Markets at the NGX, Mr Jude Chiemeka, the capital market could serve as the primary source of bulk mobilisation of capital to finance developmental projects, and NGX had implemented an array of incentives, programmes and capacity building workshops for investors.
“The pension fund industry, for example, has been able to leverage the issuances done by the DMO in recent times, and a lot of financing has come from them,” he said at the Nigeria Integrated National Financing Framework (INFF) dialogue on Channels TV with the theme How Can Nigeria Finance its Development Priorities.
“As an exchange, we provide the platform that will enable the government to finance projects through green instruments that these investors can invest in and ultimately benefit from the returns. And that is why it’s critical to ensure there’s constant investor education, sound governance and regulation.
“If you take a look at the recently revamped Capital Market Master Plan, there’s a conversation there around increasing retail investor participation in our markets,” he added.
INFF emanated as a result of a partnership among the FG, the United Nations Development Programme (UNDP), and European Union (EU) to support Nigeria in mobilising greater amounts of private and public resources to finance its development agenda.
Speaking further, Mr Chiemeka said the goal is to revamp the current active retail participation level to 5 million by 2025.
“NGX has been able to facilitate the raise of about N3.5 trillion since January 2022 for corporates, federal and state governments. We are very well equipped to support the financing of these capital projects because we have the right platform.
“Today, you talk about the African Exchanges Linkage Project, which commenced on November 18 and will be launched in December. That gives Nigeria the ability to leverage the investor base in other capital markets to fund the projects to grow the economy and lift people out of poverty,” he stated.
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