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Debt Securities

First City Monument Bank issues commercial paper worth N30 billion

FCMB has issued a fresh N30 billion worth of commercial paper, as part of its N100 billion CP issuance programme.

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FCMB contact centre

First City Monument Bank has announced the issuance of a commercial paper worth N30 billion, as part of its efforts to generate additional source of short-term funds for the bank.

The disclosure was signed by FCMB Group’s secretary, Olufunmilayo Adedibu, and sent to the Nigerian Stock Exchange, as seen by Nairametrics.

  • The Commercial Paper (CP) has a tenor of 260 days and is part of a larger effort by the bank to raise a total of N100 billion through its CP issuance programme.

What they are saying

A part of the notification sent to NSE reads:

  • FCMB Group Plc (“FCMB”) hereby notifies the Nigerian Stock Exchange (“NSE”) and its esteemed shareholders that one of its subsidiaries, First City Monument Bank Limited (the Bank) is undertaking a Commercial Paper Issuance (“CP”) under its N100 billion-naira CP programme.”

What you should know

  • FCMB had earlier in March 2020 issued a N20 billion worth of commercial paper as reported by Nairametrics. In lieu of this, the latest notice raises the total sum of Commercial Paper issuance by the bank to N50 billion, out of its benchmark target of N100 billion.
  • In a similar vein, Nairametrics also reported that Dangote Cement, MTN, Nigeria Breweries and 9 other firms raised a total sum of N478.4 billion from commercial paper issuance between January and September, 2020.
  • According to Investopedia, Commercial paper is a type of unsecured, short-term debt instrument, issued by corporations to meet its short-term liabilities. It is unsecured because it is usually not backed by any form of collateral.
  • Commercial papers are usually targeted at institutional investors, such as Pension Fund Administrators and non-pension asset managers. Some high net-worth investors are also eligible to apply.

Chidi Emenike is a graduate of economics, a Young African Leadership Initiative Fellow and an Investment Foundations certificate holder. He worked as a graduate Teaching Assistant in the Federal College of Education Kano and is also a trained National Peer Group Educator on Financial Inclusion

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    Debt Securities

    DMO announces May 2021 FGN savings bond offer for subscription

    The DMO has announced the offer for subscription of the May 2021 Federal Government Savings Bond to investors.

    Published

    on

    The Debt Management Office (DMO), on behalf of the Federal Government has announced the offer for subscription of the May 2021 Federal Government Savings Bond to investors.

    This disclosure is contained in a circular issued by the DMO on May 3, 2021, and can be seen on its website noting that there are 2-year and 3-year savings bonds.

    A breakdown of the bonds shows that the 2-year FGN savings bond will be due on May 12, 2023, at 7.753% per annum and the 3-year FGN Savings Bond which will be due on May 12, 2024, at 8.753% per annum.

    The offer has an opening date of May 3, with a closing date of May 7, while the settlement date is May 12, with the coupon payment dates as follows: August 12, November 12, February 12 and May 12.

    The circular also states that the unit of sale is N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50,000,000

    It also states that the interest is payable quarterly with the redemption expected to be in bullet payment on the maturity date.

    In case you missed it

    It can be recalled that last month, the DMO on behalf of the Federal Government, offered for subscription April 2021, Federal Government Savings Bond to investors.

    The offer consisted of a 2-Year FGN Savings Bond due April 14, 2023, at 5.522% per annum and a 3-year FGN Savings Bond due April 14, 2024, at 6.522% per annum.

    The opening date was April 6, 2021, with the closing date on April 9, 2021, settlement date on April 14, 2021, and the coupon payment dates on July 14, October 14, January 14, and April 14.

    Continue Reading

    Debt Securities

    CBN’s N88 billion treasury bill auction yesterday was oversubscribed by 174.62%

    At the end of the auction, one-year treasury bills sold for 9.75% per annum.

    Published

    on

    Some experts are uncertain of what to expect from money markets in H2 2020

    The Central Bank of Nigeria’s (CBN) Treasury Bills Auction worth N88.46 billion was oversubscribed by 174.6% yesterday. The stop rates for the 91 and 182-day tenor bills fixed at 2.00% and 3.50% respectively.

    The stop rate of the 364-day tenor bill was pegged at 9.75% according to the result of the NTB auction.

    The apex bank recorded N242.94 billion in total subscription, as the treasury bill auction was oversubscribed by 174.62%, however, T-bills worth N88.46 billion were provided across the 91-day, 182-day and 364-day tenors at the primary auction.

    At the end of the auction, bills worth about N129.46 billion were allotted to investors.

    READ: CBN’s N154.38 billion T-bills auction over subscribed by 46% as rates fall marginally  

    Demand for Treasury Bills Surge

    Demand for Treasury Bills has surged in recent months as yield-hungry investors scamper away from equities into risk-free government securities. While 2020 was marred with ultra-low interest rates on fixed income securities like Treasury Bills, yields have spiked in recent weeks to the surprise of investors.

    With inflation rate galloping past 18% the pressure to flee the naira appears to have forced the central bank to revise its monetary policy strategy, allowing rates to rise.

    READ: CBN, First Bank on collision course over removal of MD/CEO

    Summary of the NTB Auction today

    The 91-day bill was undersubscribed by 7.51% as it received a subscription of N10.53 billion, against an initial offer of N11.39 billion.

    The 182-day tenor bill on the other hand performed well, as it was oversubscribed by 50.87% with an impressive subscription of N9.05 billion which was received yesterday, against an offer of N223.35 billion.

    The 364-day tenor bill recorded the highest subscription with an oversubscription rate of 214.25%, as investors’ total subscription was valued at N223.35 billion, relative to an initial offer of N71.07 billion.

    READ: U.S Government makes a premium selling Bitcoin

    The breakdown of the allotment

    At the close of the auction yesterday, about N7.19 billion of the 91-day tenor bill was allotted, lower than the initial offer of N11.39 billion, while N6 billion worth of the 182-day bill was allotted to investors.

    With the settlement for the bill pegged for the 29th of April 2021, about N116.27 billion of the 364-day tenor bill was also allotted to investors.

    The oversubscribed bills confirm the huge demand for risk-free government securities amidst a dearth of sizeable investment funds.

    Jaiz bank

    READ: Bank of England considers digital currency

    What you should know

    • The treasury bills were auctioned in a Dutch auction structure, as the price of the offerings were set after bids were received to determine the highest price at which the total offering could be sold.
    • This provided investors with the opportunity to place bids for the amount they were willing to buy in terms of quantity and price.
    • The range of bids was placed at 1.99 and 10.00 for the 91-day tenor; 3.49 and 10.00 for the 182-day tenor, 8.8943 and 15.00 for the 364-day tenor.

    Continue Reading

      





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