Connect with us
nairametrics
UBA ads

Business News

Coupon Payments to Sustain Demand Interests on FGN Bonds

Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.

Published

on

FGN Bonds, FG lists N296 billion savings bonds on NSE, Investment Alert: The FGN Savings Bond is now open for subscription

Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.

This report is dated July 12th, 2019.

UBA ADS

***Ecobank Nigeria Reports Early Redemption of $250m, 2021 Note***

Key Indicators

Bonds: The FGN Bond market traded on a relatively stable note, with yields marginally lower by c.1bp. This was in contrast to the significant downtrend in yields witnessed in the previous session, where market players reacted to the revised SDF guidelines by the CBN.

GTBank 728 x 90

In the coming week, we expect yields to remain relatively stable, with coupon payments worth c.N100bn on the FGN 2021 and 2034 bonds expected to sustain investors’ demand for bonds in the market. Market players are however cautious with yields at current levels, as we await release of the Q3 FGN bond calendar by the DMO.

Treasury Bills: The T-bills market remained slightly bullish, with improved offers witnessed on some mid and long tenors (Mar – Jul), as the declining rates found support at 11.00% on that end of the curve.

onebank728 x 90

We, however, expect rates to remain depressed in the near term, due to the continued absence of an OMO auction by the CBN.

Money Market: Rates in the money market dipped further by c.1pct, on the back of the robust system liquidity levels from the OMO maturities in the previous session. The OBB and OVN rates consequently ended the session at 2.21% and 2.93%, with system liquidity estimated to close the week at N334 billion positive.

app
GTBank 728 x 90

We expect rates to remain relatively stable in the coming week, barring a resumption in OMO by the CBN.

[READ FURTHER: This bank is bracing up for lower yields in the treasury market]

FX Market: At the interbank, the Naira/USD rate remained stable at N307.00/$ (spot) and N357.52/$ (SMIS). The NAFEX rate at the I&E window rose marginally higher by 3k to N360.79/$. At the parallel market, the transfer rate dipped by N1 to N361.50/$, while the cash rate remained stable at N358.50/$.

app

Eurobonds: The NIGERIA Sovereigns weakened slightly, with yields marginally higher by c.4bps, following a slowdown in demand interests from the firm rally witnessed post the ‘Powell comments’ on the possibility for a FED rate cut later this month.

In the NIGERIA Corps, Ecobank announced it will call back its bonds totaling $250m and maturing in 2021 on the 14th of August 2019. Demand interests remained sustained across other tickers, with the FIDBAN 22s the most on bid.


Contact us: Dealing Desk: 01-6311667 Email: [email protected]

Disclaimer: Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment advice or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.

[READ THIS: 1-YR CBN OMO Bill Oversubscribed by 390%, Clears 15bps Lower]

Patricia
Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Around the World

FRC orders the Big Four to separate auditing from consulting services

The Big Four firms now reportedly generate the largest portions of their revenues from consultancy services.

Published

on

Big Four

The world’s four biggest audit firms —KPMG, PwC, Ernest & Young, and Deloitte — have been directed by the Financial Reporting Council (FRC) to plan towards separating their audit business from their consulting business.

The deadline for compliance with this directive is June 2024.

UBA ADS

A statement that was published on the FRC website said this directive is ‘world-leading’. The statement also explained why it became imperative to separate the firms’ operations towards ensuring that they deliver the uttermost quality audit services for the good of public interest.

By the time the operational separation officially takes effect starting from June 2024, FRC said it would be expecting the following outcomes:

  • That audit practice governance would prioritise audit quality and protect auditors from influences from the rest of the firm that may try to divert their focus away from audit quality.
  • That the total amount of profits distributed to the partners in the audit practice does not persistently exceed the contribution to profits of the audit practice.
  • The culture of the audit practice prioritises high-quality audit by encouraging ethical behaviour, openness, teamwork, challenge and professional scepticism/judgement.
  • Auditors act in the public interest and work for the benefit of shareholders of audited entities and wider society.

While commenting on this development, FRC’s Chief Executive Officer, Sir Jon Thompson, said the FRC is committed to reforms on how corporate finances are reported. Further aspects of the reform package will be introduced over time, he said.

GTBank 728 x 90

“Operational separation of audit practices is one element of the FRC’s strategy to improve the quality and effectiveness of corporate reporting and audit in the United Kingdom following the Kingman, CMA and Brydon reviews. Today the FRC has delivered a major step in the reform of the audit sector by setting principles for operational separation of audit practices from the rest of the firm. The FRC remains fully committed to the broad suite of reform measures on corporate reporting and audit reform and will introduce further aspects of the reform package over time,” Thompson stated.

Do note that the FRC reached this decision after engaging in extensive discussions with the Big Four. It was also agreed that the audit firms will submit an implementation plan to the FRC latest by October 23rd, 2020.

Recall that it was just last week when Nairametrics reported how the Big Four earned the sum of N7.53 billion as audit fees from Nigeria’s most capitalized firms in 2019. Interestingly, these firms now reportedly generate the largest portions of their revenues from consultancy services. As a matter of fact, only about 20% of their revenues now come from auditing fees.

onebank728 x 90

Patricia
Continue Reading

Corporate deals

Uber expands food delivery business in a $2.65 billion acquisition 

This deal would help Uber expand its market share against privately held DoorDash Inc.

Published

on

Uber to pay drivers diagnose with Coronavirus, suspend riders, drivers accounts, Uber to temporarily shut down operation in Nigeria as FG locks down revenue-driven routes, Uber partners Unilever to ensure compliance to health guidelines

The multinational ride-hailing service company, Uber has agreed on a deal aimed at expanding its food delivery business with the acquisition of food delivery app, Postmates Inc, in a $2.65 billion all-stock take over which is expected to be announced as soon as Monday, July 6, 2020. 

According to Bloomberg, the deal which has been approved by the board of directors of Uber, will have the head of Uber’s food delivery business, Pierre-Dimitri Gore-Coty, to continue to run the combined delivery business. Under the agreement, Postmates Chief Executive Officer, Bastian Lehmann and his team will continue to manage Postmates as a separate service. 

UBA ADS

This deal would help Uber expand its market share against privately held DoorDash Inc, the current market leader in US food delivery business. While Postmates lags behind DoorDash in the race for market share, it has still been able to maintain a strong position in Los Angeles and the American Southwest, both of which could be available to Uber eats. 

READ ALSO: Uber Introduces Uber Cash In Nigeria

Uber and Postmates who have been in discussion for about 4 years, intensified the acquisition talk about a week ago, after an approach by Uber. This move is coming on the heels of the failed bid by Uber to acquire publicly quoted GrubHub Inc, which was bought over by Europe’s Just Eat Takeaway.com NV for $7.3 billion. 

GTBank 728 x 90

Postmates’ valuation was last put at $2.4 billion when it raised $225 million in a private fundraising around last September. According to analytics firm, Second Measure, they account for 8% of the US meal delivery market in May.  

READ ALSO: In less than 72 hours USDC Treasury transfers over 50,000,000 USDC to wallets

Postmates, which was founded in 2011 was one of the first to let customers in the U.S. order meal delivery using a mobile app. However, competition has intensified in recent years and Postmates has fallen to a distant fourth. The company said in February 2019 that it had filed paperwork confidentially for an initial public offering but never went public.  

Deal book 300 x 250
onebank728 x 90

Patricia
Continue Reading

Financial Services

Cornerstone Insurance’s board will meet July 22nd to consider 2 important issues

Directors typically meet to consider/approve financial statements before they are released.

Published

on

Cornerstone Insurance Plc

Cornerstone Insurance Plc’s board of directors will meet on July 22nd to deliberate on two important company issues.

A public notice that was signed by the Company Secretary and issued to the Nigerian Stock Exchange (NSE), noted that the two main talking points at this meeting are the company’s unaudited Q2 2020 financial statements, and the proposed issuance of bonus shares to the company’s existing shareholders.

UBA ADS

As you may well know, board members of many companies listed on the NSE are all scheduled to meet later this month, ahead of the release of these companies half-year 2020 earnings reports. Directors typically meet to consider/approve financial statements before they are released.

Meanwhile, between the time a company’s board of directors meet over their financial statements and the actual release of said financial statements, there is what is called “a closed period”. During this closed period, all persons with insider knowledge of the company’s affairs are prohibited from trading in the company’s stock.

READ ALSO: Cornerstone Insurance Plc appoints new Executive Director

GTBank 728 x 90

In the case of Cornerstone Insurance Plc, a closed period on its stock will start from tomorrow (July 7th, 2020) and will remain effective until 24 hours after the release of the company’s Q2 2020 financial statements. Note that no date was given for the release of the Q2 financial report.

“Accordingly, in line with the provisions of Rule 17.17: Closed Period, Rulebook of The Exchange, 2015 (Issuers’ Rule) and which has been incorporated into Sections 5 and 6 of the Company’s Securities Trading Policy, all Directors, Persons discharging managerial responsibility, Adviser(s) of the Company, or their connected persons shall not trade in the Company’s shares from Tuesday, July 7th, 2020 until 24 hours after the release of the Company’s Unaudited Financial Statements for the Second Quarter ended June 30, 2020 to the NSE and the general public,” part of the statement by the company said.

Recall that Nairametrics reported some months ago that Cornerstone Insurance Plc was in merger talks with some insurance companies ahead of the recapitalization deadline set by the National Insurance Commission (NAICOM). The company’s Group Managing Director, Ganiyu Musa, disclosed that consolidation is a more viable option towards meeting NAICOM’s recapitalisation requirement.

onebank728 x 90

READ MORE: Dark Clouds loom for investors as stocks fall 8% in first half of 2020

It is uncertain, at this point, if the company is still considering a merger as a viable option. This is because in March 2020, Nairametrics reported that Cornerstone Insurance Plc is one of the insurance firms that have resorted to selling off their real estate properties in order to raise money. The reported had quoted the MD discussing how his company “took the big decision to sell the property which we did at a very handsome price. And just in one fell swoop, it resolved many issues. We now have a significant amount of liquidity, we do not have the headache of recapitalisation and we have done what the regulator wants, which is to convert any property to cash.”  

Meanwhile, NAICOM has since postponed the recapitalisation deadline to September 2021 due to the economic challenges posed by the COVID-19 pandemic.

app
GTBank 728 x 90

Note that the company reported a gross premium income of N4.6 billion in Q1 2020, compared to N4.8 billion in Q1 2019. However, profit for the period stood at N475.1 million, as against a loss after tax of N98.4 million during the comparable period in 2019.

The company’s stock opened today’s trading on the Nigerian Stock Exchange with a share price of N0.50. Year to date, the stock has gained roughly about 20%.

Patricia
Continue Reading