The Nigerian Stock Exchange, yesterday, reacted to media publications about Visionscap’s alleged default on  the coupon payment of a N4.85 billion bond that was due on March 5th, 2019.

According to the Nigerian bourse, it felt compelled to comment on the situation after seeing the publications, because failure to do so could result in the dampening of investors’ confidence.

“​The attention of The Nigerian Stock Exchange (The Exchange) has been drawn to certain media publications with respect to the Lagos State Government’s N4.85 Billion, 15.75% Series 1, Tranche B, Environmental Note (Municipality Note) and the alleged default in repayment of the coupon and principal on the Municipal Note due on Tuesday, 5 March 2019. The Exchange is of the view these publications if not addressed has the likelihood of dampening investors’ confidence in the Nigerian capital market.”

Confirming what we already know about the bond – Giving insight into the nature of the situation, the NSE said the Municipality Note was issued by Municipality Waste Management Contractors Limited, under a N50 Billion Medium Term Note arrangement.

Bua group

The NSE was never involved – In the statement, the NSE subtly exonerated itself from the situation, emphasising that “the Municipality Note was not listed on The Nigerian Stock Exchange.”

The NSE would have done it better? – The Exchange said it would taken necessary measures to carefully investigate and confirm that any financial instruments being listed on the Nigerian bourse meet certain criteria.

“We wish to inform the investing public and our stakeholders that the Municipality Note was not listed on The Nigerian Stock Exchange. As part of its regulatory oversight to safeguard investors in the Nigerian capital market, The Exchange takes steps to satisfy itself that the financial and other advisers have done due diligence on all financial instruments listed on The Exchange in order to ensure that the obligations attached to those instruments are met as and when due.

As part of the requirements for the issuance and the listing of similar debt instruments, The Exchange requires that a Guarantee on the revenue of the State Government is issued, in addition to an approval of the State House of Assembly to back the Notes. The established requirements are necessary to ensure that the risk of default on such instruments when listed on The Exchange are reduced to the barest minimum.”

Finally, the NSE used the medium to assure the investing public of its continued commitment to protect investors, whilst ensuring that the Exchange remains transparent, fair and efficient.

The Securities and Exchange Commission previously reacted – As we noted in an earlier analysis on this matter, SEC stated that there was very little it can do. This is because the bond in question is a private bond.

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