The Nation Newspaper

Tag: bonds

  • DMO raises N100b in bonds

    DMO raises N100b in bonds

    The Debt Management Office (DMO) yesterday  sold N100 billion ($610.1 million) worth of bonds at higher yields for three- and 10-year paper.

    At the same time, it was able to offer lower yields on 20-year benchmark debt.

    DMO said it sold N15 billion of three-year debt at 11.49 per cent, 37 basis points higher than the 11.12 per cent the paper fetched in August.

    Debt Management Office also sold N50 billion of 10-year debt at 12.23 per cent against 12.22 per cent previously. The debt office sold N35 billion worth of 20-year paper at 12.29 per cent, lower than 12.38 per cent at the previous auction.

    All the debt notes were re-openings of previous issues, while total demand was up marginally to N175.99 billion compared with N174.01 billion at the previous sale.

    The DMO said Nigerian companies have in recent months, issued nine bonds worth $30.4 billion in the International Capital Market.

    The Director-General of DMO, Dr. Abraham Nwankwo said the Nigerian companies took advantage of the window opened through the successful issuance of Nigerian Sovereign Eurobonds to successfully issue the international bonds.

    Nwankwo said the funds will be instrumental in helping Nigeria meet its infrastructural needs especially power.

    He noted that “for the first time in Nigeria’s economic history, the private sector has been enabled to access long-term funds from both the domestic and international capital markets. The successful issuances of three Nigerian Sovereign Eurobonds in the International Capital Market – one in 2011 and two in 2013 – have opened the window for Nigeria’s private sector to raise required foreign currency funds.”

    Nwankwo, said the DMO is now able to fund long-term real sector projects  in agriculture, manufacturing, housing, mineral exploration and processing, infrastructure, for diversified and sustainable economic growth, towards employment generation and poverty reduction”

    Meanwhile, the naira is expected to come under pressure next week after oil prices continued to decline and offshore investors sold down their local debt holdings.

    The naira yesterday traded at N163.90 to the dollar, compared with Wednesday’s close of N163.45 due to strong demand from importers and other forex end users. The naira closed at N162.90 to the dollar yesterday.

    “We have seen strong buying interest from some offshore investors in the last couple of days, while the market is actually jittery on the continued drop in the oil price in the international market,” one dealer said.

    Oil traded slightly lower below $99 a barrel on Thursday, pressured by ample supply. The naira crossed the 163 to the dollar level on Wednesday despite intervention by the central bank. The bank has been selling undisclosed amounts of dollars directly to lenders this week to try to stabilise the naira, which has declined by about 3.5 per cent this year.

  • Banks may raise $2.5b in bonds

    Banks may raise $2.5b in bonds

    Banks may raise about $2.5 billion this year, compared with the $2 billion it raised in 2013, according to FBN Capital, the investment-banking unit of Nigeria’s largest bank by assets, FBN Holdings Plc.

    Analysts said international debt sales are becoming more common as yields on Nigerian Eurobonds due July, 2023, declined 96 basis points this year. That compares with an average 35 basis-point drop in emerging-market yields, according to Bloomberg indexes.

    The Central Bank of Nigeria (CBN) last month changed the way lenders calculate capital buffers. The regulator ordered banks it considered too big to fail to boost minimum capital ratios to 16 per cent last year, compared with 10.5 percent for South African lenders, which control most of the continent’s banking assets.

    “Capital adequacy for many of the banks will be close to the minimum” once the changes are taken into account, Mike Nwanolue, an analyst at Lagos-based Greenwich Trust Group Ltd. Told Bloomberg.

    The CBN removed some assets lenders can count as capital in preparation for the implementation of Basel II and III, while limiting Tier 2 capital to 33 percent of Tier 1 capital, according to an August 5 circular from the regulator.

    Minimum capital requirements for lenders with operations outside the country was kept at 15 percent and at 10 percent for those with interests only in Nigeria.

    The changes will shave 100 to 400 basis points off the capital adequacy ratios of most banks, Adesoji Solanke, an analyst at Renaissance Capital in Lagos, said.

    Policy makers in 2010 set up the Asset Management Corp. of Nigeria, which spent N5.6 trillion  buying bad loans while taking over three of the eight banks it rescued with a N620 billion.

    Two of the lenders, Mainstreet Bank Ltd. and Enterprise Bank Ltd., will be sold to new owners by September 15, AMCON Chief Executive Officer Mustafa Chike-Obi said in June. Divestment of Keystone Bank will follow.

  • Global bonds surge on outlook for record rates

    Bonds are rallying from the United States of America (USA) to Germany to Australia amid speculation the Federal Reserve will disappoint investors looking for signals it’s moving closer to raising interest rates from a record low.

    Treasury 10-year yields rose yesterday from almost the lowest level since May. German benchmark rates dropped to a record yesterday amid bets the European Central Bank will resort to buying bonds to spur growth. Unrest in Ukraine and Gaza is fueling the rally by boosting demand for the relative safety of government debt.Ten-year yields were at or near 2014’s lowest levels in 21 of 25 developed markets tracked by Bloomberg.

    “The Fed is likely to be a bit of a damp squib,” said Nick Stamenkovic, a fixed-income strategist at broker RIA Capital Markets in Edinburgh. “Treasuries in general have been more affected by the geopolitical environment, particularly at the longer end.”

    Bloomberg reported that Treasury 10-year yields added two basis points, or 0.02 percentage point, to 2.48 percent. The price of the 2.5 percent note due May 2024 was 100 6/32. The yield fell three basis points, or 0.03 percentage point, on Tuesday after sliding to 2.40 percent on May 29, the least since June 2013.

    Australia’s (GACGB10) 10-year yield dropped five basis points to 3.42 percent, and Japan’s was little changed at 0.53 percent.

    German 10-year bund yields fell as low as 1.109 percent yesterday, dropping below the previous record set in 2012 when the region was in the throes of a downturn that threatened the euro’s existence. It’s little changed today at 1.12 percent.

    The Bloomberg Global Developed Sovereign Bond Index (BGSV) has gained 4.8 percent this year through yesterday, recouping a decline from 2013.

    “The potential implications for global growth seemed to have underpinned Treasuries and global fixed income,” said Su Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. “It’s hard to see an end to some of these geopolitical risks.”

    The Fed will keep its target for overnight bank lending in a range of zero to 0.25 percent at the end of its two-day meeting today, based on a Bloomberg News survey of economists.

    US policy makers are scaling back the bond-buying program they have used to support the economy, and will reduce monthly purchases to $25 billion from $35 billion this week, based on responses from economists.

    Dan Fuss, whose Boston-based Loomis Sayles Bond Fund (LSBDX) outperformed 98 percent of its competitors during the past five years, said geopolitical risks will keep the Fed from raising interest rates for at least a year.

    “There’s reason to worry geopolitically,” Fuss said this week on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays in New York. “I think our central bank takes that into account.”

    Traders see almost an 80 percent probability the Fed will raise the target for its benchmark to at least 0.5 percent by September 2015, based on futures contracts.

    The US is scheduled to sell $15 billion of two-year floating-rate notes and $29 billion of seven-year fixed-rate securities today. The government auctioned five-year notes on Tuesday and two-year debt the day before.

  • $360b infrastructure gap: Bonds, PPP to the rescue

    $360b infrastructure gap: Bonds, PPP to the rescue

    A combination of bond issuance and Public-Private Partnership (PPP) offers strategic and operational choices to stakeholders in addressing Nigeria’s huge infrastructure gap. COLLINS NWEZE writes on the need for governments at the states and federal levels to explore either or both choices in fixing the infrastructure challenge.

    For the Federal and state governments, bond seems the way to go to addresscertain problems. Many states and the Federal Government have been going to the Stock Market for bonds to take care of some of their projects, especially infrastructure development.

    The African Development Bank (AfDB) says Nigeria needs $360 billion to fix infrastructure and bond issuance remains a viable option for achieving it.

    Lagos State alone needs an estimated $50 billion to address its infrastructure needs in 10 years. This comes to $5 billion yearly, which is a far cry from its annual budget estimated at $3.1 billion (N497 billion).

    Lagos State Finance Commissioner Ayo Gbeleyi said the existence of such funding gap made Public-Private Partnership (PPP) a welcome strategy for the government to bridge the huge infrastructure deficit.

    He said the PPP option allowed the state to tap into the private sector’s capital and leverage on its managerial efficiency, technology, innovation, entrepreneurial approach and expertise.

    In the FDC Economic Report, Bismark Rewane said for an economy with an estimated Gross Domestic Product (GDP) of $282 billion and a yearly GDP growth rate of about 6.8 per cent, fixing such gap would required a recourse to bond issuance (debts).

    The Fiscal Responsibility Act of 2007 set a 40 per cent ceiling for Nigeria’s public debt to GDP and the International Monetary Fund (IMF) raised the threshold to 56 per cent in 2013.

    However, Rewane said the establishment of a debt ceiling is arbitrary at best since there are many variables that should determine optimal debt level that are not included in determining the ceiling.

    “Since the economic well-being of a country should be seen through the prism of a sound business entity, there ought to be a distinction between “bad debt run up” and “good debt build up,” he said.

     

    AfDB’s perspective

    According to the AfDB, improving Nigeria’s infrastructure could boost the country’s GDP by about four per cent. Some of the sectors that require attention include power, road, rail, information communications technology (ICT) and transportation. However, access to finance, to fund the development of most of these critical sectors has remained a challenge.

    According to the continental bank, Nigeria has an infrastructure deficit of about $360 billion and Islamic finance can be of great help in fixing the gap.

    The bank said addressing these challenges will require a substantially larger annual level of investment in infrastructure, a significant increase in annual allocations for routine and periodic maintenance to ensure reliable infrastructure services, and increased attention to the institutional arrangements that support the infrastructure network of the country and the related services.

    The Islamic model uses money as a measuring tool for value and not as an asset in itself, so income is not received from money as this is seen as exploitative and usurious. Investment vehicles through the Islamic finance structure are based on shared business risk.

    The growth of Islamic finance globally also means there is an increasing demand for new ways of identifying Islamic-compliant business activities. Presently, the London Stock Exchange is working on the creation of new indices. This means the creation of a new way of identifying Islamic finance opportunities – a world-leading Islamic Market Index.

    Bond option

    Many analysts think Islamic finance via bonds has shown resilience despite the slowdown in the global economy and the pressure on conventional banking in Western countries.

    Undeterred by the uncertain recovery elsewhere in the world’s financial markets, growth of the Islamic finance market globally has continued unabated this year. Shariah-compliant assets are estimated at upward of $1.4 trillion and are likely to sustain double-digit growth in the coming two to three years.

    The Central Bank of Nigeria (CBN) guidelines on non-interest banking put the minimum capital base of N10 billion ($63.1 million) for National Islamic Banks and $31.59 million for regional Islamic banks. However, the regulator allows deposit money banks to offer non-interest banking products, using existing structure such as the branches and manpower.

    The CBN said Islamic finance which has become household name in Europe and America should not be ignored.

    Aside, Nigeria, global acceptance for Islamic finance is increasing by the day despite initial hitches to its survival. According to Standard & Poor’s (S&P), Islamic finance remained a demand-driven market, with scarce supply, still hampered by a limited range of Islamic financial centres and their various regulatory frameworks.

    The rating agency said it believed that regulatory efforts to accommodate Islamic finance and the establishment of additional industry bodies at national levels will take center-stage starting, this year.

     

    Nigeria’s new moves

    Nigeria’s profile as Africa’s most liquid debt market after South Africa has been rising since JP Morgan and Barclays last year, included its bonds in their sovereign bond indices, encouraging greater foreign participation in its debt market. The use of Islamic finance in Africa could grow further as several north and sub-Saharan African countries including Morocco, Tunisia, South Africa and Kenya are laying the legal groundwork to be able to issue sukuk, an Islamic finance bond.

    Osun State, last year floated the country’s first Islamic bond, taking a major step towards developing an Islamic finance industry in the country. Analysts said the Nigerian Sharia-compliant bond issued by the state while relatively small at $62 million, signaled the start of a trend.

    The sukuk is based on an ijara structure, a common leasing arrangement in Islamic finance, which bans payment of interest. Sukuk have become an increasingly popular investment globally, particularly among cash-rich funds in the Gulf and Southeast Asia.

    Also, the Islamic Development Bank is lending $150 million through Sharia-compliant facilities for the new Lekki Port in Lagos State, Nigeria. The CBN said Islamic finance products also have the capacity for ensuring financial inclusion of significant segment of the population. It stated that when properly harnessed, the system could contribute significantly in turning Nigeria into a major international financial hub.

    It said Islamic finance has shown its potential in achieving financial inclusion in many economies by bringing in large under banked populations, especially Muslims into the urbanised financial sector.

    According to the apex bank, “Nigeria has so far registered Jaiz bank, and has given a licence to Stanbic IBTC Bank to operate some window. Also, an approval was given to Sterling Bank to operate an Islamic window and a microfinance bank that has applied for Islamic banking licence. This is in addition to the work being done by National Insurance Commission to promote Takaful, an Islamic insurance product.”

    According to the CBN, many Islamic financial markets had established their presence in all the major financial centres and were playing key roles in deepening the financial markets with products across the globe.

    Chairman, Advisory Committee of Experts on Non-Interest Banking, Sterling Bank Plc, Sheik Abdulkader Thomas said deposits from non-interest banking could be deployed into infrastructure funding and other developmental projects.

    Thomas, who is an American living in Kuwait, described Nigeria as a huge market for non-interest banking given its large population base. He said the banking concept is a viable means of gathering huge deposits, adding that although Nigeria’s infrastructure is seen as weakness, deposits from non-interest banking could be used to fix it.

    He said: “We have to look at a country like Nigeria from a different perspective. Kuwait has small population, with very high wealth. But Nigeria has very large population. We believe that non-interest banking will be very important to gather savings from the grassroots population.”

    He said the billions of dollars in the non-interest banking accounts globally, cannot find its way into Nigeria, rather, the country should generate its own funds to finance key projects and create wealth for her citizens.

    President, Chartered Institute of Stockbrokers (CIS), Ariyo Olushekun said prospects for Islamic finance are very bright. He said the finance system has become necessary since a very significant proportion of the population strongly believe that based on the nature of the capital market and the dictates of their religion, they cannot invest in the market. He said there is therefore, need to develop products that are attractive to these set of investors to allow easy flow of their funds into the market.

    “The one that is popular is Islamic finance. Some Christians also do not like certain things, some do not like alcohol, some cannot put their money in companies producing arms and ammunitions some cannot put their money into companies that are gambling and all that. So, all these funds are outside the market, we need to bring them in, call them any name. “If traditional or idol worshippers need certain product, develop it and use it to bring their money into the market. The same thing applies to everybody,” he said.

    Olushekun said these products are limited to any religion adding that what is important is to improve the depth of the market by introducing products and instruments that will channel funds, savings into the market.

    This, he said would allow those who have projects to be able to raise limitless amount of money from the market to execute those projects.

    Analysts said there are a number of very good reasons for the public sector using PPP to assist state governments in developing infrastructure.

     

  • SEC grants indefinite life to supranational bonds

    SEC grants indefinite life to supranational bonds

    Securities and Exchange Commission (SEC) has made a fundamental amendment to its rules and regulations on debt issues by international issuers with the removal of any restrictive limitation on lifespan of initial documentation filed by an issuer for a bond issue, otherwise known as shelf life.

    A new amendment to the rules and regulation of SEC obtained by The Nation indicated that the apex capital market regulator has amended its rules on shelf registration to grant indefinite lifespan to the prospectus of supranational issuers.

    The amendment to rule 279, section five, subsection two stipulates that a shelf prospectus relating to non-equity securities issued by supranational agencies shall be effective indefinitely from the date of its registration.

    However, information in the shelf prospectus shall be updated prior to the issuance of any tranche or series by the filing of an addendum to the shelf prospectus with the Commission.

    SEC explained that the addendum may include information statement and any other relevant information, which shall be incorporated by reference in any tranche or series to be issued.

    The amendment will encourage supranational issuers such as International Finance Corporation (IFC) and African Development Bank (AfDB) to issue bonds in Nigerian market. The readily available shelf prospectus will ensure supranational issuers can quickly roll out bond issues.

    Already, the IFC and AFDB have started arrangements to issue Naira-denominated bonds worth $2.5 billion, about N400 billion, in landmark bond issues that could further redefine the Nigerian domestic debt market.

    The Nation had reported the prospective bond issues by both supranational bodies, with due confirmation from SEC. Both the IFC and AfDB were interested in raising medium term note (MTN) bonds.

    According to SEC, IFC has already approached the apex capital market regulator for a medium term note (MTN) programme for a naira-denominated bond worth about $1 billion while the AfDB has also filed for similar instrument of about $1.5 billion.

    Vice president and treasurer, International Finance Corporation (IFC), Mr. Jingdong Hua, recently said that IFC intends to build on the success of its maiden Naira-denominated issue to institute a long-term Naira-denominated domestic bond issuance programme as part of efforts consolidate its financing activities in Nigeria and help in the development of the domestic capital market.

    IFC, a member of the World Bank, had in February 2013 raised N12 billion or $76.3 million through first-ever local-currency bond by a non-resident issuer in Nigeria.

    According to him, long-term Naira-denominated bond issuance programme would enable IFC to source and provide more amenable funds to Nigerian companies as local-currency issue will eliminate fluctuations and concerns related to foreign exchange and allow companies to focus on optimisation of their operations.

    He said IFC would work closely with SEC to develop the necessary framework that will facilitate the long-term bond issuance programme noting that commendable regulatory initiatives by SEC have engendered market development.

    “A vibrant, local-currency capital market is essential for any country to achieve its full economic potential, and a cornerstone of our strategy to help countries achieve sustainable growth. Our desire to put in place a programme for regular Naira-denominated issuances reflects IFC’s commitment to the domestic capital markets in Nigeria, and our growing investment to support private sector development in the country,” Hua said.

    the amount of corporate bonds raised from 2010 to date is more than two and half times all the bonds issued by corporations from 1960 to 2009 in nominal terms.

     

  • Corporate bonds suffer biggest loss since June in Europe

    Corporate bonds suffer biggest loss since June in Europe

    Company bonds handed investors the biggest loss in six months in Europe this week on concern borrowing costs will rise as the Federal Reserve starts paring stimulus.

    Investment-grade notes in euros forfeited an average 0.6 percent this week, the most since the period ended June 21, according to Bloomberg bond index data. The average yield on the debt jumped six basis points to a seven-week high of 1.9 percent, the data show.

    Investors are withdrawing from global bond markets on speculation a strengthening U.S. recovery will spur the Fed to scale back asset purchases before the end of the year. American employers added 185,000 workers last month, putting payroll gains on track for the best year since 2005, according to economists surveyed by Bloomberg before data due today.

    “Everyone is getting excited about the job numbers looking stronger,” said Simon Ballard, head of credit strategy at National Australia Bank Ltd. in London. “Investors are worried the Fed will start to taper its bond buying even this month and that’s pushing up yields around the globe.”

    The cost of insuring corporate bonds rose for the first time in six weeks, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies climbing 3.8 basis points this week to 83 basis points, the highest since Nov. 13.

    Microsoft Corp. led 23 billion euros ($31 billion) of corporate issuance in Europe, up from 15.6 billion last week, according to data compiled by Bloomberg. The Redmond, Washington-based company issued 3.5 billion euros of notes as part of an $8 billion sale in dollars and euros, a record offering from the world’s largest software maker, the data show.

     

    Culled from Bloomberg

  • AfDB eyes $1.5b bonds

    AfDB eyes $1.5b bonds

    The African Development Bank (AfDB) is planning to raise $1.5 billion in local-currency bonds in Nigeria and Zambia to finance infrastructure projects.

    This became exigent as emerging-market bond yields rise on speculation the Federal Reserve will reduce economic stimulus.

    The AfDB, which gives money to African governments for projects in areas, such as roads, ports and energy, is completing the planned size of the medium-term note programmes and is in talks with authorities in the two countries, Olivier Eweck, financial technical services manager in the bank’s treasury department, said in a statement.

    “Before the end of the month we would have made up our minds on the numbers,” he said.

    The Nigerian issues may be worth as much as $1 billion and the Zambian debt may reach the kwacha equivalent of $500 million,” he said.

     

  • DMO to raise N104b through bonds today

    The Debt Management Offices (DMO) is to raise N104.8 billion ($670 million) in its monthly auction of bonds today, FBN Capital has said.It said the total sales target is higher than its projection given that the agency had raised N285 billion (gross) in just three months and that the approved 2013 budget sets domestic borrowing (net) at N577 billion.

    In a report, FBN Capital said the DMO tentatively offered Nigeria’s long bond in February to raise just N15 billion and may have been surprised by the bid of N79 billion for the paper.

    “The auctions in the past year have generated demand comfortably above projected sales, a rare exception being September. Many offshore investors may favour the longer dated treasury bills but few, if any liquid government bond markets match the yields available in Nigeria. Also, the shift by domestic institutional investors from bonds to equities has not been dramatic,” it said.

    It said that the market rally since last August driven by tight monetary policy is not exhausted, and that yields on the more liquid bonds may narrow by 100 basis points in the first half of the year.

    FBN Capital said this calendar, unlike that for the first quarter, has been prepared with an approved 2013 federal budget in place. The budget statistics showed an expenditure of N4.99 trillion, a deficit of N887 billion and domestic borrowing (net) of N578 billion. It said once the proposed $1 billion Eurobond was excluded, and the $100 million Diaspora bond, too, there would be a deficit financing gap of about N140 billion.

    The deficit, it said, could be covered by asset sales and signature bonuses, though the government’s recent track record for the first is poor and prospects for the second are undermined by the continuing impasse over the Petroleum Industry Bill in the National Assembly.

    “We accept that best practice requires a range for issuance and favours front-loading in the calendar year. Yet, the low point in the range for second quarter still looks high in the context of the DMO’s sales of bonds totaling N285 billion (gross) in first quarter and of the projection for domestic borrowing (net) in the budget,” it said.

    It said the DMO reopened the bond in February and found that it attracted the highest bid at auction (N79 billion). This vindicated the its thinking that the reopening would be well-received, given the increasing role of the Pension Fund Administrators (PFAs) and other institutional investors at auction.

    It said the total monthly bid has averaged N161 billion over the past 12 months, except for September last year when (N83 billion) auction was recorded.

    “We expect the DMO to meet the calendar comfortably. We detect a certain cooling of offshore interest in the market, and cite the sharp increase in sales at the Central Bank of Nigeria’s forex auction. That said, we feel that the good inflation story as well as Nigeria’s inclusion in the government bond indices of JP Morgan and Barclays will underpin strong demand for domestic and some offshore investors,” it said.

     

  • Investors stake N348b on bonds

    •Pause on equities

    Investors appeared cautious and ponderous last week with most of them opting to play safe by placing funds on virtually risk-free sovereign bonds. Consequently, investors increased stakes on Federal Govern-ment’s bonds on both the Over-the-Counter (OTC) bond market and the Nigerian Stock Exchange (NSE) but turnover dropped on the equities market.

    Companies last week started to announce their audited reports and accounts and dividend recommendations for the year ended December 31, 2012, fuelling a furry of portfolio rebalancing and repositioning.

    The market dynamics last week were partly decided by reconsideration of share prices with fundamentals yields, especially for stocks that had driven the market rally overtime. Investors also showed stronger preference for low-priced stocks.

    Turnover on the OTC bond market picked up to 271.38 million units valued at N328.18 billion in 1,327 deals last week as against a turnover of 172.42 million units worth N204.58 billion in 1,005 deals two weeks ago.

    On the NSE, investors increased stakes on bonds by 143 per cent with turnover of 16,050 sovereign bond units valued at N19.34 million in 66 deals. Investors had staked N7.97 million on 6,460 units in 21 deals in the previous week.

    Contrary to the increased momentum at the bond market, turnover at the equities market slowed down to 2.48 billion shares worth N22.82 billion in 32,471 last week as against 4.25 billion shares valued at N23.18 billion traded in 39,391 deals in the previous week.

    With earnings and dividend yields so far indicating current yields of below 3.0 per cent, investors appeared to be looking forward to matching fundamental returns with technical prospects.

    Low-priced stocks dominated the top bracket of activity chart. Unity Bank Plc, Transnational Corporation of Nigeria Plc and Guaranty Trust Bank Plc were the most active stocks, accounting for 552.779 million shares worth N4.070 billion in 4,417 deals.

    Financial services sector remained the most active sector with 69 per cent of total turnover. Financial stocks altogether pooled a turnover of 1.72 billion shares valued at N13.68 billion in 18,961 deals. The consumer goods sector staged a distant second with a turnover volume of 199.67 million shares worth N6.12 billion in 5,677 deals. The conglomerates sector placed third with a turnover volume of 187 million shares worth N479.22 billion in 1,441 deals.

    In spite of swings towards negative, the market closed positive with a weekly increase of 1.91 per cent. The All Share Index (ASI), the main index that tracks all equities on the NSE, appreciated by 1.91 per cent to close at 33,895.08 points. Aggregate market capita-lisation also trended upward by 1.91 per cent to close at N10.846 trillion.

    With more decliners than advancers, gains by highly capitalised stocks supported the overall market situation. Nestle Nigeria led 37 other stocks on the gainers’ list with a gain of N54.77 to close at N890. Dangote Cement followed with a gain of N15 to close at N160 while Total Nigeria rose by N14.52 to close at N151.53.

    On the downside, Guinness Nigeria led 54 other losers with a drop of N13.70 to close at N276.30. Julius Berger Nigeria trailed with a loss of N12 to close at N54 while Okomu Oil Palm lost N9.27 to close at N52.36 per share.

     

  • Investors move funds to bonds as equities slow down

    Investors appeared to be rebalancing their portfolios in favour of bonds as four-day consecutive decline at the equities market dampened investors’ appetite.

    Turnover at the Over-the-Counter (OTC) bond market, where Federal Government’s bonds are traded, improved considerably last week in contrast to the slow down at the equities market.

    Investors staked N204.58 billion on 172.42 million units of bonds in 1,005 deals last week compared with a turnover of 152.116 million units worth N174.11 billion recorded in 912 deals two weeks ago.

    However, turnover at the equities market slipped to N23.18 billion for 4.25 billion shares through 39,391 deals as against N24.69 billion staked on 3.57 billion shares in 39,321 deals in the previous week.

    With investors reevaluating the prospects for mid and high-cap stocks, activities shifted to low-priced stocks. Otherwise known as penny stocks, stocks trading around 100 kobo to 200 kobo range were the most active stocks. Unity Bank Plc, International Energy Insurance Company Plc and Sovereign Trust Insurance Plc were the three most active stocks, accounting for 20.92 per cent of total turnover for the week. Altogether, the three financial services stocks pooled a turnover of 888.79 million shares worth N700.62 million in 2,634 deals. Transnational Corporation of Nigeria (Transcorp) Plc also recorded a turnover of 355.103 million shares valued at N698.511 million in 1,610 deals.

    The financial services sector remained the main driver of activities with 76.53 per cent, 61.87 per cent and 60.51 per cent of total equity volume, value and number of deals during the week. The financial services sector recorded a turnover of 3.25 billion shares valued at N14.34 billion through 23,835 deals. Conglomerates sector staged a distant second position with a total turnover volume of 363.527 million shares worth N964.618 million in 2,053 deals.

    Losses by fast-moving consumer good (FMCGs) companies dragged the overall market to the negative. The All Share Index (ASI), which tracks prices of all equities on the Nigerian Stock Exchange (NSE), depreciated by 55.04 points or 0.17 per cent to close the week at 33,258.45 points. Aggregate market value of all equities also dropped by 0.15 per cent to close at N10.643 trillion.

    Although there were 51 gainers to 42 losers, the preponderance of mid and high-cap manufacturing stocks coloured market negative. Guinness Nigeria topped the losers’ list with a drop of N7.41 to close at N290. Lafarge Wapco Cement Nigeria followed with a loss of N5.20 to close at N69. Total Nigeria dropped by N3.99 to close at N137.01. Forte Oil lost N2.41 to close at N14.26, while Flour Mills of Nigeria was down by N2.26 to close at N77.74 per share.

    On the positive side, Nestle Nigeria led the gainers with a gain of N20.27 to close at N835.234. Okomu Oil Palm added N7.63 to close at N61.63. GlaxoSmithKline Consumer Nigeria rose by N7.49 to close at N55.09. Mobil Oil Nigeria chalked up N5.53 to close at N125.97 while CAP rose by N2.36 to close at N36.10 per share.