The Debt Management Office (DMO) said on Thursday that it has listed its third sovereign Sukuk, N162.557bn 7-year 11.200 per cent AL Ijarah Sovereign Sukuk due 2027, on the Nigerian Stock Exchange and the FMDQ Securities Exchange.
This disclosure is contained in a press statement titled ‘Listing of N162.557bn 7-Year 11.200 per cent Al Ijarah Sovereign Sukuk due 2027 on the Nigerian Stock Exchange and FMDQ Securities Exchange’, issued by the DMO on Thursday, March 19, 2021, as can be seen on its website.
The statement says that the Sukuk, which at the time of issuance was massively subscribed to the tune of N669.124bn or 446 per cent, was issued to finance 44 economic road projects across the 6 geopolitical zones, it stated.
With the listing, it said, investors who were already holding the Sukuk could trade them while new investors had an opportunity to buy the Sukuk in the secondary market.
The Director-General of DMO, Patience Oniha, while speaking on the listing said the FGN Sukuk may only be listed for trading on relevant exchanges after the commencement of works on the road project for the construction of the Sukuk assets.
She said this is in order to create a pool of assets consisting of non-financial and financial assets that could be freely traded while avoiding the prohibition of dealing in interest-based transactions arising out of the sale of debt and exchange of currency not at par.”
What you should know
- The DMO started the issuance of sovereign Sukuk in September 2017 as one of the measures towards attaining its strategic objective of bridging the infrastructure gap in Nigeria to promote job creation and economic growth.
- Following the successful issuance of the N100bn debut Sukuk in 2017, the DMO issued another N100bn Sukuk in 2018. The proceeds of the 2 Sukuks were deployed to the rehabilitation and reconstruction of road projects across Nigeria.
- Through the sovereign Sukuk initiative, the DMO said it had raised a total sum of N362.57bn in less than three years for the rehabilitation and construction of major economic roads across the country.
- It said by issuing sovereign Sukuk, the product range available to investors in the domestic financial market had increased, while several retail investors had been attracted to the financial markets.
MTN invests N121 billion in fixed deposits, treasury bills, etc
MTN Nigeria invested a whopping N121.5 billion in bonds, treasury bills and foreign currency deposits in 2020.
Nigeria’s largest telecommunications company, MTN Nigeria invested a whopping N121.5 billion in bonds, treasury bills and foreign currency deposits in 2020. This compares to just N9 billion in 2019 suggesting the GSM giant had challenges deploying the capital raised during the year.
MTN raised N143.96 billion in several syndicated facilities during the year which was to be utilized for its network expansion plans. However, the Covid-19 induced lockdowns affected capex activities forcing most companies to freeze spending on anything that is capital intensive. Effective Interest Rates for most of the loans obtained by MTN range between 3.5% and N5.8% per annum.
From the breakdown seen by Nairametrics, MTN invested N93 billion in naira denominated fixed deposits, equivalent of N19 billion in US dollar deposits and another N34.8 billion in treasury bills. The total amount invested earned MTN about N15.84 billion in income which it used to offset its finance cost of over N129 billion.
Why it matters
Interest rates for risk-free government securities fell drastically in 2020 as investment outlets dried up locally. This triggered a massive influx of money into the stock market helping it to close above 50%, one of the best performing in the world last year.
- For companies like MTN with a significant cash hoard, treasury operations are a significant part of the activities of its finance department.
- The investments in risk-free treasury bills despite the negative real return (when interest rate is adjusted for inflation) suggest corporates will rather fix their money in treasury bills than leave it idle in commercial banks.
- It also suggests corporates like MTN are more favourably disposed to lending to the government despite Nigeria’s ballooning public debt and its attendant risk to its credit ratings.
- Despite the investments, MTN still closed the year with about N275 billion cash in its balance sheet.
Emzor Pharmaceuticals accesses capital markets for the first time, lists N13.7bn Bond on NGX
Emzor Pharmaceutical Industries Limited, has listed its N13.7bn 5-Years Series 1 Bond exclusively on NGX.
Wholly-owned, indigenous pharmaceutical manufacturing group, Emzor Pharmaceutical Industries Limited, has listed its N13.7 billion 5-Years Series 1 Bond exclusively on the Nigerian Stock Exchange Limited “NGX” Platform.
Information contained in a statement published on the NGX website revealed that the N13.7Bn 5-Years Series 1 Senior Unsecured Fixed Rate Bond due by 2026, under the company’s N50 billion Debt Issuance Programme, is the first public instrument listed by the Nigerian pharmaceutical group.
Why this matters
In line with the objective of the NGX Group, Emzor capitalized on the robust size of the Nigerian Capital Market to bridge funding gaps and restructure its existing debt profile, through its N50 billion Debt Issuance Programme.
Details of the transaction revealed that Emzor was able to access the domestic debt capital markets for the first time and raise 5 years of financing in local currency using a corporate bond, with the issuance of its N13.73 billion 5-Year 10% Series 1 Senior Unsecured Fixed Rate Bond.
The proceeds from the bond initiated by Emzor Pharma Funding SPV Plc, a special purpose vehicle set up to finance Emzor’s funding requirements, will be used to finance the purchase of notes and other debt securities issued by Emzor, in accordance with the terms of the Master Notes Purchase Agreement (the “MNPA”).
The N13.73 billion Series 1 Unsecured Bonds accorded with an ‘A-’ credit rating by Global Credit Rating Co., was undersubscribed by 8.47% as the intended capital was pegged at N15 billion.
What you should know
- Emzor Pharmaceutical Industries Limited is a renowned manufacturer of quality pharmaceutical products and medical consumables. The company has grown its product portfolio from a modest four products in 1987, to more than 120 different products in recent times.
- The company has a wide range of products in the analgesic, anti-malaria, vitamin/haematinics/multivitamin supplement, anti-helmintic, antibiotics and therapeutic categories.
Nairametrics | Company Earnings
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