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Debt Securities

Daily Update on Bonds, Treasury Bills, Forex and Oil Price.

Daily performance of major economic indicators and highlights from tradings sessions and key statistics such as Treasury Bills, bonds, FX rates, inflation, oil price.

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stock, market, stock market, Nigerian Stock Exchange

Daily performance of major economic indicators and highlights from tradings sessions and key statistics such as Treasury Bills, bonds, FX rates, inflation, oil price.

Bond Market Trades Flat, Despite Significant Cut in Auction Rates

***FG launches Micro Pension Plan for informal sector***

Key Indicators

Bonds

The FGN Bond market traded on a relatively flat note despite the significant cut in stop rates at yesterday’s auction. We witnessed slight demand on the short end of the curve (23s & 24s) countered by some profit taking on the 2028s which trended higher by c.20bps on the day, (having compressed significantly in the previous session). Yields were consequently unchanged on the day, closing at c.14.30% on average.

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We expect yields to trend slightly upwards due to the recent profit taking sentiments in the market. We should however witness some renewed demand if the CBN maintains a hold on OMO sales.

Treasury Bills

The T-bills market traded on a relatively flat note, even as the CBN held of on OMO despite the c.N60bn in OMO T-bill maturities today.

Market players anticipate a renewed OMO auction by the CBN tomorrow, due to expected inflows from FAAC payments. We expect the market to trade slightly bearish if this occurs.

Money Market

Rates in the money market declined by c.5pct as inflows from retail FX refunds bolstered system liquidity which opened the day at c.N80bn positive. The OBB and OVN rates consequently ended the session at 10.07% and 10.71% respectively.

We expect rates to trend slightly higher tomorrow, due to expected outflows for Bond auction debits, a possible OMO sale and Retail FX provisioning by banks.

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FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in the I&E window depreciated further by 0.03% to N360.80/$, whilst market turnover improved by 74% to $203m. At the parallel market, the cash rates depreciated further by 0.03% to N358.30/$ whilst the transfer rate remained unchanged at N364.00/$ respectively.

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Eurobonds

The NGERIA Sovereigns remained slightly bearish, with yields higher by c.3bps on the day. Investors however showed renewed interest for duration plays on the longer end of the curve (47s and 49s).

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In the NGERIA Corps, we witnessed interests mostly on the DIAMBK 19s and FIDBAN 22s.

__________________________________________

Contact us:

Dealing Desk: 01-6311667 | Dayo: 07032208237 | Seyi: 08023231396 | Nnamdi: +2348133385000 | Tosin: +2347039394376

Email: [email protected]

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Debt Securities

UPDC moves to redeem N4.355 billion bonds

UPDC is set to redeem its N4,355 billion Series 1 Bonds on the 26th of April, 2021.

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UACN Property Development Company Plc (UPDC) is set to redeem its N4,355 billion Series 1 Bonds on the 26th of April, 2021.

This information was contained in a notice tagged “Notice to the Bondholders of UACN Property Development Plc”, issued by the Company Secretary, Folake Kalaro.

According to the information contained in the notice, UPDC, under Condition 3.2 of the Terms and Conditions of the Bonds, will redeem the N4,355,000,000 Series 1 Bonds on the 26th of April, 2021 from the bondholders, together with the accrued Coupon (the annual interest rate paid on the bond) up to, but excluding the Redemption Date.

The company revealed that the Coupon on the Bonds will cease to accrue on and after the Redemption Date.

What you should know

  • On the Bond’s Redemption Date, it is important to note that the Registrar of the Bonds, Africa Prudential Plc, shall pay to each Bondholder’s designated account, the amount payable to him/her in respect of the Redemption.
  • The Redemption payment to the Bondholders shall be equal to 100% of the principal amount together with all accrued and unpaid Coupon. Following the Redemption, the listing of the Bonds on the FMDQ Securities Exchange Limited will be canceled.
  • It is essential to understand that the N4.355 billion Series 1 Senior Guaranteed Fixed Rate Bond Due 2023 under UPDC’s N20 billion Bond Issuance Programme, was listed in 2018 following the approval of the SEC.
  • The move to issue the N4.355 billion bonds was made following an unsuccessful attempt to raise N5.16 billion via a rights issue, which recorded subscription for 879.65 million ordinary shares valued at N2.64 billion.

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Debt Securities

Ecobank Nigeria secures N50 billion 10-Year subordinated loan

Ecobank Nigeria has secured a N50 billion, 10-year bilateral subordinated loan.

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Ecobank Nigeria

Ecobank Nigeria, a subsidiary of Ecobank Transnational Incorporated (‘’ETI’’) has announced that it has secured a N50 billion, 10-year bilateral subordinated loan.

This is according to a disclosure signed by the Group Head, Adenike Laoye and sent to the Nigerian Stock Exchange, as seen by Nairametrics.

The bilateral funding will enable the bank to maintain stable liquidity and improve its balance sheet, especially the capital adequacy ratio by an estimated circa 300 basis points.

What they are saying

The disclosure from the bank read thus:

“Ecobank Transnational Incorporated (“ETI”), the parent of the Ecobank Group, announces that one of its significant subsidiaries, Ecobank Nigeria, secured N50 billion, 10-Year bilateral subordinated loan.

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“The bilateral funding provides stable medium-term liquidity to the balance sheet of Ecobank Nigeria and positively improved its balance sheet ratios, especially the capital adequacy ratio by circa 300 basis points. The transaction proceeds would be deployed to support Micro, Small and Medium Scale Enterprises (“MSMEs”) and Small Corporates.”

What you should know

Ecobank Transnational Inc. had earlier recorded 11% rise in its interest income to N139.6 billion for Q3 2020, as captured by Nairametrics.

  • Subordinated loans have lower priority than other debt instruments in case of liquidation. They are only repayable after other debts have been paid.
  • This debt can either be secured or unsecured and it typically has a lower credit rating and higher yield than other senior debt.

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Companies

Flour Mills moves to diversify funding sources with N29.8 billion bond listing

Flour Mills Nigeria Plc lists N29.8 billion bonds to diversify funding sources from the Nigerian capital market.

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Flour Mills makes one of the largest contributions to COVID-19 relief fund

Flour Mills Nigeria Plc’s fresh N29.8 bond listing will help the nation’s leading food business company to explore diversified funding sources from the Nigerian capital market, with the hope of enhancing growth and the development of the company.

This statement was made by the Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the listing of the Tranche A and Tranche B bonds valued at N29.8 billion on the Nigerian Stock Exchange (NSE).

The food and the agro-allied company which has remained Nigeria’s largest and oldest integrated agro-allied business with a broad profile and robust Pan-Africa distribution issued these bonds under its N70 billion Bond Issuance Programme.

Olusanya said that the company would continue to explore funding opportunities inherent in the capital market to ensure business growth and continuity.

While speaking about the Credit Rating of the Programme, he disclosed that FMN’s credit rating, as well as the operational financing of the Group, have improved considerably.

Specta

According to him, the bonds floated by Flour Mill will help to strengthen the company’s capital base and provide the needed working capital required by the Company. He added that Flour Mills Group will continue to deleverage and replace short term financing with longer-tenured and lower price funding to optimize capital structure and reduce financing cost.

He noted that Flour Mills will continue to explore opportunities to raise fundings via the capital market as this enables the company to diversify its funding sources and continue to play a role in the capital market as a significant player in it.

What they are saying

The Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the virtual event, said;

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  • “We are delighted with the response from the market, we are happy to be listed.
  • “We are introducing an N29.9 billion listing under an N70 billion bond issuance cover; we will continue to raise funding to diversify our funding sources.
  • “The company remains passionate about feeding the nation to improve the quality of living for Nigerians through increased production and investments in backward integration.”

What you should know

  • With the successful issuance of the new N29.8bn Tranche A and Bonds, FMN has utilized its bond issuance program registered in 2018.
  • It is important to note that the Senior Unsecured bond listing includes an N4.89bn under Series 4 Tranche A of the bond issuance programme, at a 5.5% rate for 5 years, due by 2025, and a 25bn under Series 4 Tranche B of the same program at a 6.25% rate for a tenure of 7 years, due by 2027.
  • The bond proceeds will be used to refinance existing debt obligations. It will also help the company take collaborative actions to diversify the company’s financing options beyond expensive short term debt.

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