The Federal Government and corporate Issuers’ confidence in the capital market have continued to firm up as bond issuances in the first half (H1) of 2022 on Nigerian Exchange Limited (NGX) grew to over N2.5 trillion, NGX has said.
This is despite uncertainty surrounding access to fresh capital for expansion as well as infrastructural projects.
Also, the Eurobonds Listings on NGX grew to $4 billion while equity listings rose by N1.08 trillion despite the weak macroeconomic environment.
Analysis of the issuance
- According to a statement from the NGX, analysing the exchange’s listing H1’22 report (January – June), the Federal Government dominated issuances, while corporate organisations made significant inroads during the period.
- For instance, the NGX started the year with the landmark listing of BUA Foods’ 18 billion shares listed at N40 per share, adding N720 billion to the NGX market capitalization. Abbey Mortgage Bank also listed its right issue of about N3.028 billion, while Access Holdings, following its merger and acquisition, listed new shares valued at N353.675 billion.
- Furthermore, NPF Microfinance Bank listed 3,107,001,335 ordinary shares of 50 kobo each arising from the offer of 2,286,657,766 ordinary shares of 50 kobo each at N1.50 per share via a Rights Issue on the basis of 1 new ordinary share for every 1 ordinary share held and public offer of 713,342,234 ordinary shares at N1.50 per share made by NPF Microfinance Bank Plc amounting N4.66 billion.
- These issuances listed across both the bonds and equities markets are essential in deepening the market, enhancing tradability, increasing access to capital to fund growth returns, hence, creating wealth for market stakeholders.
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Corporate bond issuance actually declined in H12022. Obviously, FMDQ was the preferred listing destination for the few bonds (on few listed on NGX). This is aside of the commercial papers that were registered on FMDQ. Meanwhile as DMO and CBN jerk up the interest rates then it caused jitters in the equity market as investors sell off would occur. The management of NGX are short of ideas on rejuvenating the primary market preferring instead allocating and sharing generous bonuses thereby short changing investors with no dividends.