STL Trustees Capital Market & Money Market News Recap

While you were away!

FITCH RATES NIGERIA’S $2.5BN EUROBONDS ‘B+’

Fitch Ratings on Wednesday 15^th November 2017 assigned a ‘B+(EXP)’ rating to Nigeria’s upcoming $2.5 billion Eurobond.

In a statement announcing the rating, Fitch said: “Fitch Ratings has assigned Nigeria’s upcoming senior unsecured USD-denominated notes an expected rating of ‘B+(EXP)’. “The assignment of the final ratings is contingent on the receipt of final documents materially conforming to information already reviewed. “The expected rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’ with a Negative Outlook. “The rating is sensitive to any changes in Nigeria’s Long-Term Foreign-Currency IDR. “

On 31 August 2017, Fitch affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ with a Negative Outlook. The Long-Term Local-Currency IDR is also ‘B+’ with a Negative Outlook.” Data released by the Debt Management Office (DMO) on Tuesday 14^th November, showed that Eurobonds account for 21.5 percent of the country’s  $15.35 billion foreign debt and 53 percent of debt service payments in the third quarter. Total domestic debt stood at N15.68 trillion as at September, compared with N13.35 trillion last year.    Multilateral loans, including financing from the World Bank, accounted for 64.5 percent of foreign loans while bilateral loans with China and other countries make up 14 percent.

FGN PROTEST AS MOODY’S DOWNGRADES ISSUER RATING TO B2

Rating Agency Moody’s Investors Service on Tuesday 7^th November 2017, downgraded the Government of Nigeria’s long-term issuer and senior unsecured debt rating to B2 from B1 and the senior unsecured MTN program rating and provisional senior unsecured debt rating to (P)B2 from (P)B1, with a stable outlook.

The latest B2 rating is equivalent to Nigeria’s existing B/Stable Outlook rating from S&P and slightly lower than Nigeria’s B+/Negative Outlook rating from Fitch.

In another development, the Federal Government has disagreed with Moody’s rating through the response by the Federal Ministry of Finance (FMF), Central Bank of Nigeria (CBN) and the Debt Management Office (DMO), which indicated that since Nigeria was last rated by Moody’s (as B1 stable) in December 2016, the country has successfully emerged from a protracted recession and recorded important improvements across a broad range of indices.

The Federal Government drew the attention of Moody’s to Nigeria’s return to economic growth of 0.55 per cent in Q2 2017 and returning business confidence, as evidenced by a PMI index of 55.0.

The nation’s fiscal and monetary authorities also noted that the country now has a stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates, which has now led to improved foreign exchange reserves, totaling $34 billion.

The effect of the  downgrade by Moody’s is that government may need to pay a slightly higher interest rates whenever it seeks to borrow from foreign investors, as  foreign investors are likely to ask for more premium on their expected returns given Moody’s report that the government is in a far weaker position than it was last year.

FGN TO AUCTION THE RE-OPENING OF N100,000,000,000 EXISTING BONDS IN NOVEMBER 2017

The Debt Management Office (DMO) has published in a circular dated Tuesday 14th November 2017 that The Federal Government of Nigeria (FGN) shall on 22^nd November 2017 offer for subscription by auction, a 5 and 10 years re-opening of previously issued Bonds.

The details of the offer is as specified below;

Summary of Offer

N50,000,000,000 -14.50% FGN JUL 2021 (5 – Year  Re-opening)

N 50,000,000,000 -16.2884% FGN MAR 2027 (10 – Year  Re-opening)

Auction Date: November 22, 2017

Settlement Date: November 24,  2017

ISSUER: Federal Government of Nigeria (“FGN”)

UNITS OF SALE: N 1,000 per unit subject to a minimum Subscription of N 50,001,000 and in multiples of N 1,000 thereafter.

INTEREST PAYMENT: Payable Semi-Annually

REDEMPTION: Bullet repayment on the maturity date.

SEC URGES CAPITAL MARKET OPERATORS TO ADAPT TO NEW BUSINESS ENVIRONMENT

 The Director General of the Securities and Exchange Commission (SEC) Mr. Mounir Gwarzo, has urged capital market participants to constantly adapt to new and rapidly changing economic, regulatory and business environments which will aid them in performing their expected roles in the economic development of the nation.

During his opening remarks at the 21st Annual Conference of the Chartered Institute of Stockbrokers, the Director General stated as follows “almost everything now comes down to the application of (relevant) technology. In fact, at the nucleus of dynamic changes in technology. The financial market institution of the future is one that is currently making the conscious effort to automate its processes by leveraging on relevant technology”.

He, however, noted that as an evidence of the responses to dynamic changes in the Nigerian Financial Market, the capital market has begun to observe the evolution of new products and processes which include Sukuk, Green Bonds, Derivatives, Commodities and Financial Technology (Fintech).

On market regulation and development by SEC, he said that the Commission is committed to continue developing the Nigerian Capital Market in line with the 10-year Master Plan. Also, the E-Dividend initiative is very central and recently the Commission has embarked on a massive media campaign to sensitize the public on the December 31, 2017, deadline on free e-dividend registration exercise and regularization of multiple accounts by investors.

In addition, he highlighted that the Commission has strengthened its Rule making process and more Rules are considered on a timely basis with the underlying justifications which will aid the market’s understanding of the thought process behind coming up with the rules.

As evidence of yielding positive results on some of the recently introduced initiatives, he disclosed that the number of reported cases of infractions in the market has reduced from 291 in Q1’2016 to 36 in Q3’ 2017.  Also, the number of Enforcement Cases has come down from 49 to 30 within the same period.

He concluded by saying that all the initiatives introduced and results are believed to help capital market stakeholders respond adequately to the dynamic changes in the financial market.

 DOLLAR EXCHANGE RATE REPORT 6^th   NOVEMBER TO 17^th    NOVEMBER, 2017

This report is a compilation of the dollar exchange rate at the official and parallel market from the 6^th of November to the 17^th of November, 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.