As the low-interest regime that characterized most of 2020 continues with no immediate sign of an increase, pension fund managers have also continued to rid their portfolios of treasury bill investments.

Analysis of the recently released September 2020 edition of Pension Fund assets, by the Pension Commission of Nigeria, PenCom, shows that pension fund managers reallocated their assets away from treasury bills to FGN Bonds.

READ: Nigeria’s Micro Pension industry: A gold mine waiting to be tapped

In the month of September 2020, according to the latest report, pension fund managers closed out of treasury bill positions worth N0.224 trillion while loading up on FGN bonds worth N0.254 trillion. Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.

READ: FG posts 27% revenue shortfall in 2020 as budget deficit hit N6.1 trillion

At the beginning of 2020, total pension fund assets invested in treasury bills stood at N1.88 trillion, but that has fallen to N0.78 trillion as at the end of September 2020. Put in another way, as at the end of 2019, 18.4% of pension fund assets were invested in treasury bills but as at September 30, 2020, pension funds’ treasury bill investment stood at 6.7%

READ: Pension Fund Assets hits N9.3 trillion as investment in FGN securities drops

Implications for domestic borrowing and monetary policy

Treasury bills serve a whole lot of purposes for the government. They are used as a means for the government to borrow to cover short term budgetary deficits as well as a means for the Central Bank to manage the supply of money and its inflationary effects.

READ: Worry for PFAs as pandemic-induced unemployment lowers new pension accounts

With the increasing and seeming lack of interest by pension fund managers, who, usually are big players in the treasury bill market, the government may find it a bit problematic raising the much-needed domestic borrowing from them.

READ: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets

In like vein, the Central Bank’s ability to implement monetary policies through treasury bills and others, open market operation, may also suffer. May be, fiscal policy may become a more potent instrument of economic management, if that happens.

The Finance Act 2020 was recently signed into law by President Buhari and became effective from January 1, 2021.

According to the provisions of the Finance Act 2020, the federal government can borrow from the pool of unclaimed dividends of quoted companies that have remained unclaimed for a period of not less than six years from the date of declaring such dividends.

Nairametrics earlier reported that the members of the House of Representatives had raised alarm over N200billion locked up in the unclaimed dividends pool.

READ: Reps to investigate alleged illegal withdrawal of $1.05 billion from NLNG account

The following steps would be quite helpful in redeeming your unclaimed dividends that are less than six years old in the pool:

Step 1: Check your names using the link – http://sec.gov.ng/non-mandated/ to obtain the list of shares relating to your names from SEC. It will display all the companies you have shares in and the registrars in charge.

Step 2: Take note of the registrar’s name for each of your company’s shares. A registrar is the company that keeps details of your shares/shareholdings.

READ: A wholistic approach to Nigeria’s power and agricultural sector challenges

Step 3: Download and fill your registrar’s form which is usually beside the company’s name on the website.

Step 4: Submit your form to the registrar, with acknowledgement, most times, through your bank.

Quite a number of the companies would require that you visit your bank and get a bankers’ confirmation to be able to initiate e-dividend form for you. With e-dividend in place, your dividends can be automatically credited to your designated bank account.

READ: SEC advises defunct Skye Bank shareholders to process unclaimed dividends

Why this matters

• Over N200billion is estimated to be trapped in the pool of unclaimed dividends and this is quite huge.
• It is clear that as soon as the provision is fully applied and implemented, no shareholder will be able to claim their unclaimed dividends of at least six years old in the pool, in the short/medium term, as the funds would have been transferred to CBN under Unclaimed Funds Trust Fund to be borrowed by the federal government.

InfraCredit, a specialized infrastructure credit guarantee institution, has announced its guarantee of Transport Services Limited’s (‘’TSL’’) N12billion 10-Year Series 1 Senior Guaranteed Fixed Rate Infrastructure Bonds due 2030, as part of a larger N50billion Debt Issuance Programme.

This is according to a notification by InfraCredit, seen by Nairametrics.

Nairametrics learnt that the deal is the first 10-year bond issuance by any company in the transportation and logistics sector.

What you should know

• Nairametrics earlier reported that InfraCredit secured an additional $27 million equity investment from InfraCo Africa.
• The bond proceeds will be used to refinance TSL’s short-term loans to matching long term fixed rate debt that will sustainably support its consistent business growth and expansion plans.
• Transport Services Limited (‘’TSL’’) is a leading transport and logistics company co-founded by Ayodeji Wright and Wale Fatoki in 2001. It offers value-added logistics and distribution services to a wide range of corporate and retail clientele in industries such as agro-processing, FMCG, oil and gas, cement, amongst others under fixed-term contracts.
• Stanbic IBTC Capital Limited and ARM Securities Limited acted as joint Issuing Houses/Bookrunners for the transaction.

What they are saying

Commenting on the recent development, the Chief Executive Officer of Transport Services Ltd (TSL), Mr. Ayodeji Wright, stated that:

• “The TSL Bond was conceived few years ago and I am profoundly grateful to the entire Project 4 Transaction Parties, TSL Bond Investors and the Regulators, who have made this become a reality today. The successful issuance of the Bond is attributable to our relentless and collaborative efforts, underscored by our track record of excellence in 19 years of existence as an indigenous logistics and evolving Mobility Company.
• “Today, TSL remains committed to delivering its vision of providing bespoke supply chain and logistics solutions within Nigeria, and to sub-Saharan Africa. The TSL Bonds will undoubtedly be the springboard to provide the financial reinforcement to our business strategy, strong operating model and will in turn stimulate an atmosphere for profitable growth over the next decade.”

On the other hand, the CEO of InfraCredit, Chinua Azubike, remarked that,

• “Despite the challenges brought by the recent COVID-19 pandemic, this achievement demonstrates InfraCredit’s continued support for inclusive access to long term local currency finance for infrastructure development, and the deepening of the domestic debt capital markets with good quality asset classes for domestic investors.
• “TSL, over its 19-year history, has built a strong pedigree as a highly experienced and innovative transport and logistics service provider particularly in safety, maintenance, and journey administration. As we expand and diversify our guarantee portfolio to the transportation sector and given the importance of transport infrastructure to Nigeria’s economic recovery, we believe that our role remains vital in enabling businesses to deliver more essential infrastructure that can drive a clear and sustainable development impact on economic activities, as well as improve the livelihoods of Nigerians.”

Why it matters

According to the disclosure, Nairametrics learnt that with the support of InfraCredit’s guarantee, the Series 1 Bonds issued by TSL was accorded ‘AAA’ long term credit rating by Agusto and Co. and DataPro Limited, indicating a high level of creditworthiness and credit quality.

In lieu of this, the deal was oversubscribed by eighteen (18) institutional investors including eleven (11) domestic pension funds.