Economy
Moody’s Downgrades Seplat, Two Others
By Aduragbemi Omiyale
The ratings of three non-financial corporates in Nigeria have been downgraded by Moody’s Investors Service on the back of the weakening of the federal government’s credit profile.
The affected organisations are Seplat Energy Plc, Dangote Cement Plc, and IHS Holding Limited.
In a statement issued on Friday, the rating agency said it has also repositioned the national scale corporate family rating (CFR) of Dangote Cement to A3.ng from Aa3.ng to reflect the mapping of Global Scale Ratings to National Scale Ratings.
Moody’s noted that though the corporates have relatively prudent financial policies, adequate liquidity, moderate to low leverage and strong business profiles, they are still constrained by the foreign currency country ceiling because they are materially exposed to Nigeria’s economic, political, legal, fiscal and regulatory environment.
Seplat is less exposed to convertibility risk, given most of its revenue is paid in dollars. However, its export dollar oil revenue must be repatriated back into Nigeria within 90 days of receipt, after which Seplat can transfer these US dollar funds back into offshore bank accounts, the rating firm said.
It stated that to date, Seplat has had no restrictions imposed by the Central Bank of Nigeria (CBN), and the company targets 70 per cent of total cash balances in Dollars and 70 per cent of that in offshore accounts.
Seplat’s $650 million senior unsecured notes are due in 2026, and the company has a good liquidity profile supported by $305 million of cash on the balance sheet and full access to the $350 million undrawn revolving credit facility as of September 2022.
As for Dangote Cement, Moody’s said its high proportion of dollar debt in the capital structure exposes the company to currency convertibility risk.
It noted that while the cement firm continues to grow its dollar revenue through exports and repatriation of dollar cash flow from its other African operations, it still relies on the CBN for foreign exchange (FX), which remains restricted.
The company’s liquidity profile is adequate but is exposed to ongoing refinancing risks because of the large portion of short-term debt equal to N326 billion, representing 60 per cent of total debt as of June 30, 2022. It also benefits from strong cash flow generation, with cash balances of N194 billion as of June 30, 2022.
As for IHS, the renowned rating company said its downgrade also reflects exposure to currency convertibility risk, which over time will weaken the company’s liquidity position if it is unable, for a prolonged period, to upstream cash flow generated in Nigeria to the group level.
IHS earns around 67 per cent of its EBITDA from Nigeria, denominated in Naira, but its contracts are either dollar-linked or have Naira CPI pricing escalators that allow the company to pass through most of the cost inflation or currency depreciation it is exposed to.
“Nevertheless, the fact that revenues are invoiced in Naira exposes the company to Dollar shortages in the country and the resulting convertibility risk.
“IHS serves its dollar bonds through cash upstreamed to the group by its international operations, the largest one of which is in Nigeria,” it said.
Moody’s noted that during the six months to June 2022, IHS upstreamed $147 million of cash from Nigeria, in addition to regular upstreams from other operating companies.
It said liquidity remains good and is supported by a cash balance of around $500 million outside of Nigeria as well as a $270 million fully available liquidity facility, which Moody’s expects will provide the company with adequate liquidity for the next 2-3 years even in the case it was unable to upstream any cash flow from Nigeria over this timeframe.
Recall that last week, Moody’s downgraded Nigeria’s local currency country ceiling to B1 from Ba3 and the foreign currency country ceiling to B3 from B2.
By Adedapo Adesanya
Food Concepts Plc, the parent company of fast food brands like Chicken Republic and PieXpress, has disclosed plans to pay 10 Kobo in interim dividend to new and existing shareholders for the 2026 financial year.
This was disclosed by the company in a notice to the NASD Over-the-Counter (OTC) Securities Exchange, where it trades its securities.
The notice indicated that the proposed interim dividend, which comes with no bonus, will be paid to those who hold the stocks of the company as of the qualification date for the dividend, which was Tuesday, March 24.
This means only those who hold the company’s shares as of the closing session will be eligible to receive the stipulated dividend payment.
The shareholders of the company will be credited with the 10 Kobo dividend on Tuesday, March 31.
The notice noted that the closure of the company’s register will be on Wednesday, March 25, through Friday, March 27, 2026, both days inclusive.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
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