STL Trustees Capital Market & Money Market News Recap

While you were away!

FGN SET TO ISSUE DEBUT GREEN BOND IN THE DOMESTIC MARKET

The Debt Management Office (DMO) on Wednesday 13^th December 2017 announced that it was set to issue the first Sovereign Green Bonds worth N10.69bn to finance some aspects of the 2017 budget.

“As part of the preparations towards the Issuance of the Bond, the Debt Management Office would sensitize the prospective investors in the Bond through a roadshow in Abuja and Lagos on December 14 and 15 in Abuja and Lagos respectively”.

In a statement by the DMO, “the Green Bond proceeds will be used to finance projects in the 2017 Appropriation Act that have been certified as green because of their positive effects on the environment. Among the projects to be financed with the proceeds of the Bond are renewable energy micro utilities and afforestation programmes of the government”.

The Green Bond is being issued following Nigeria’s endorsement of the Paris Agreement on Climate change on September 21, 2016. The Paris agreement aims to strengthen the global response to the threat of Climate change, and since the signing of the agreement, various signatory countries have initiated several steps aimed at making the environment better.

With the green Bond Issuance, Nigeria will become one of the few countries in the world and indeed the first African country to issue a Green Bond.

The DMO is working with the Federal Ministry of Environment towards the Issuance and the Offer will be advertised in various media including newspaper and DMO’S website to enable the general public to subscribe to the Bonds.

DMO TO REDEEM N198.032 BILLION OF TREASURY BILLS MATURING IN DECEMBER

 The Debt Management Office (DMO) announced on Tuesday 12th December 2017, that it shall redeem the total of N198.032 billion Nigerian Treasury Bills (NTBs) which is due to mature this December 2017.

In a circular published on its website, the DMO mentioned that the N198.032 billion comprises of N131.415 billion and N66.617 billion of NTBs which will mature on December 14, 2017, and December 21, 2017, respectively. Before now, the practice has been to rollover NTBs at maturity.

It will be recalled that the Government had announced plans to refinance some maturing domestic debt with external borrowing as part of its overall debt management strategy of reducing Debt Service Costs. Other objectives of this strategy are to free up space in the domestic market for other borrowers and achieve a more sustainable debt portfolio mix of 60% Domestic and 40% External.

The NTBs will be redeemed primarily using proceeds of the USD500 million raised through a Eurobond Issuance by the Federal Government in November 2017. Nigeria had issued a dual-tranche USD3 billion Eurobond in November 2017 out of which USD2.5 billion is to part-finance the deficit in 2017 Appropriation Act and the balance of USD500 million is for the refinancing of domestic debt.

By redeeming the N198.032 billion NTBs, the Government is not only implementing its debt management strategy but also providing liquidity to the financial system to enable the private sector access credit from banks and issue securities in the domestic market to raise funds. The DMO expects operators in the market to use this opportunity to develop the other segments of the debt capital market such as Corporate Bonds.

FITCH CUTS SHORT NIGERIA’S GDP FORECAST IN 2017

Rating Agency Fitch, on Friday 8^th December 2017, announced that it has cut its 2017 economic growth forecast for Nigeria to 1% from 1.5%. According to the Rating Agency, Nigeria returned to growth in the second quarter of 2017 after shrinking by 1.5% in 2016 but the recovery has been fragile because oil revenues remain depressed and hard currency is short.

Speaking at a Fitch event in London, Jermaine Leonard, a director for sovereigns, added that although Nigeria’s 2018 budget had an oil production target of 2.3 million barrels per day, the Fitch forecast was just above two million bpd.

Fitch currently rates Nigeria at B+ with a negative outlook, which reflected the fact that there were still a lot of elements which could take it down, said Leonard. “But at this point, we are cautiously optimistic,” he said. The country is moving ahead with plans to borrow $5.5 billion from foreign investors aiming to plug a large gap in Nigeria’s finances that stem in part from the global fall in oil prices.

 DOLLAR EXCHANGE RATE REPORT 4TH DECEMBER TO 15^TH DECEMBER, 2017

This report is a compilation of the dollar exchange rate at the official and parallel market from the 4^thofDecember to the 15^th of December, 2017.  The quoted parallel market prices are to serve as a guide to readers, as they represent the average price obtained daily from different black market dealers in the Country.