Shareholder groups in the capital market, speaking to the News Agency of Nigeria, have advised Etisalat Nigeria to settle the $1.2 billion debt it owes 13 commercial banks to avoid a takeover, even as the banks insist on the prosecution of the foreign directors of the company and its principal Mubadala.
The banks claim the Mubadala-appointed CFO of Etisalat Nigeria ( name withheld) diverted over $700,000 from the proceeds of the sale of its towers it earned when it sold to IHS – a Nigerian towers and telecommunications infrastructure provider. According to bank officials, they had financed the import and purchase of the towers through Huawei of China to help build the infrastructure backbone for Etisalat. But when the telco earned hard currencies from the sale, Etisalat failed to repay their USD loans as was done by other telcos like MTN and Airtel.
” It makes no sense that the Etisalat CFO simply exchanged the USD they earned at the official rate of $/ N200 when the forex markets was at almost $/N400 and used it for other purposes”, said a bank risk official at the weekend.
“Had they paid off the USD loans with the USD they earned from the sale of the towers there would absolutely have been no problem today”, the bank official said.
When contacted, an Etisalat official who spoke to THISDAY on condition of anonymity, said that their CFO converted the USD to Naira and used the proceeds to pay off Naira loans because of a higher Naira interest rate. The banks are, however, crying foul saying why would they elect to hold a USD loan when revenues are in Naira and USD scarce?
“So when you get a rare USD revenue inflow, the only sound governance is to pay off USD debts and reduce foreign exchange risk.That Finance Director from Mubadala and Etisalat in AbuDhabi has questions to answer over the transaction which may have caused the bad loans through reckless and fraudulent trading, ” a bank official said, insisting that the Etisalat CFO must be held to account after the company moved to pull out of Nigeria without paying off the debt.
The shareholder groups equally insisted that Etisalat must settle its indebtedness to the banks, so that the lenders in turn can pay dividends to their shareholders. Mr. Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, called on Etisalat to settle the debt owed the commercial banks to avoid legal action, adding however that the affected banks should approach the court for receivership if Etisalat failed to settle the debt.
He stated that the banks had obligations to their shareholders, insisting that the debt must be paid. Also, Mr. Godwin Anono, the Chairman of Nigeria Professional Shareholders Association, said that the network operator should settle the debt and desist from making unnecessary noise about the whole thing. He said the transaction was in line with customer-banker relationship, noting that the terms and conditions of the loan must be met. Anono said that the shareholders were in support of the banks to acquire the company if Etisalat failed to settle the loan. “This is like any other transactions, it’s not government business and I stand on existing protocols that the banks should acquire the company,” he said.
In his view, Mr. Sewa Wusu, Head of Research, SCM Capital Ltd., said that the issue of loan between Etisalat and the consortium of banks was a customer-banker relationship, which ought to be settled amicably with terms agreeable to both parties. He said that the issue was beginning to elicit concerns in the banking industry given the level of the amount involved and its potential impact on the balance sheets of the banks involved. “But I think the monetary authority is also involved to ensure prompt settlement of the situation among the parties,” he said. Etisalat Group in the United Arab Emirates, on June 20, said it had transferred its 45 per cent stake and 25 per cent preference shares in Etisalat Nigeria to a loan trustee. It said it had been notified to transfer its stake by June 23, saying that the stake had a carrying value of zero on its books. However, in the last few months, Etisalat Nigeria has been in talks with Nigerian banks to restructure $1.2 billion loan after missing repayments. The loan is a seven-year facility agreed with 13 banks in 2013 to refinance a $650 million loan and for funding expansion of its network. Although the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) had stepped into the fray to prevent a takeover by the banks, the discussions failed to produce an agreement on the debt restructuring.Another meeting with the regulators is scheduled for Friday or Monday according to sources familiar with the transactions.
But as the shareholder groups fret over Etisalat’s indebtedness to the banks, another crisis is about to rear its head in the petroleum sector which may lead to fuel shortages around Nigeria, following the move by 18 Nigerian lenders to commence the process of classification of loans that were extended to oil marketers and depot operators in the downstream sector of the oil and gas industry, but is now turning bad in the books of the banks following the failure of the Finance Ministry to pay subsidy and FX differential claims from 2013 and 2014.
THISDAY gathered that if the debts are not paid by the marketers and the Federal Ministry of Finance, the banks will begin seizing the marketers’ tank farms in lieu of the NPLs, which could potentially lead to massive job losses in the sector and fuel shortages. The indebtedness of the marketers to the banks followed the failure of the federal government to pay the outstanding subsidy claims and matured letters of credit (LCs) arising from the old subsidy regime, which amounted to about $2 billion. THISDAY had reported that the huge debts, which grew as a result of the naira devaluation and the interest charges by the banks that funded the importation of fuel cargoes, have since forced foreign banks such as the Citi Bank, BNP Paribas and others to stop opening lines of credits for oil marketers.
The development has also led to the Nigerian National Petroleum Corporation (NNPC) assuming the role of sole importer of petrol, as marketers focus on the importation of diesel, which has no price cap, having been deregulated. There are also speculations that the marketers could shut down their depots on July 1, in protest against their unpaid subsidy claims. When contacted by THISDAY, the Chairman of Depot and Petroleum Products Marketers’ Association (DAPPMA) and Chief Executive Officer of Heyden Petroleum Limited, Mr. Dapo Abiodun declined to speak on the alleged threat by the marketers to shut down their depots on July 1. Also, the Executive Secretary of DAPPMA, Mr. Femi Adewole said he was not aware of any planned shutdown of depots by DAPPMA but confirmed that the banks have initiated moves to seize the tank farms of marketers for failure to liquidate the loans. According to him, lack of working capital due to huge debts owed marketers by the federal government has eroded their ability to source funds from the banks for imports. “Banks have equally classified marketers’ accounts with the aim of seizing tank farms due to the bad loans,” he said. “When we say that the banks have classified the accounts of a marketer, we mean that such a marketer is owing one bank a loan whose repayment is long overdue and no other bank would give such a company any loan whatsoever,” Adewole added.
Documents obtained by THISDAY showed that when the debts owed the marketers by the federal government was last reconciled in 2016, the outstanding balance was $1,522,111, 841.10. The documents also showed that the Major Oil Marketers’ Association of Nigeria (MOMAN) and DAPPMA members were originally indebted to 18 Nigerian banks to the tune of $1,184,621,931.17 before interest charges and exchange rate differentials pushed the outstanding claims to $2 billion, according to marketers, who spoke off the record. Detailed data on the marketers’ original indebtedness to the 18 banks revealed that 16 banks initially had $911,336,510.11 as outstanding unliquidated LCs with DAPPMA members, while nine banks had $273,285,421.06 as outstanding unliquidated LCs with MOMAN members. According to the marketers, no reconciliation of unpaid subsidy claims has taken place between the marketers and the federal government since the beginning of 2017.
In a communiqué at the end of a recent meeting in Lagos, DAPPMA had expressed the fears that the Asset Management Corporation of Nigeria (AMCON) might take over their tank farms as a result of the NPLs. “Some of our members have resorted to staff retrenchment due to inactivity,” the marketers had added. Acting President Yemi Osinbajo at a meeting on May 22 was said to have directed the Minister of Finance, Mrs. Kemi Adeosun to initiate the process of paying the oil marketers all outstanding subsidy claims. Osinbajo had summoned the meeting with the marketers in which Adeosun, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and the central bank governor, Mr. Godwin Emefiele were said to be in attendance. France to Invest €1bn
But despite the oil marketers’ woes, France yesterday disclosed that it has set aside about €1 billion to invest in the nation’s oil and gas industry, stating that Nigeria would remain its first economic trading partner in Africa. According to NNPC, the French Ambassador to Nigeria, Mr. Denys Gauer stated this when the Group General Manager, Public Affairs Division of the corporation, Mr. Ndu Ughamadu led a delegation to visit the ambassador in his office in Abuja. Gauer, said in a statement from the NNPC signed by Ughamadu, that the €1 billion had been put in place by French development agency to encourage French investors to invest in Nigeria’s oil sector. He however did not provide details on the fund’s application. He noted that the French government was also cooperating with the federal government in its fight against the Boko Haram insurgency in North-east. Gauer equally commended the government for stemming the insecurity in the Niger Delta and explained that Total, a French multinational oil company, has significant investments in the Nigeria Liquefied Natural Gas (NLNG) Company and Egina deep water oil project. Notwithstanding the reported commitment of France to Nigeria, Gauer also expressed concern that some other French companies were having challenges with what he described as Nigeria’s unclear fiscal policies in the oil sector.
He said, however, that some French investors were currently developing wind energy and solar energy in Katsina State. The statement said Ughamadu informed Gauer that the NNPC under the current management led by the Group Managing Director, Dr. Maikanti Baru, was well positioned and open to investment opportunities from France and its investors. He said with the significant drop in pipeline vandalism and insecurity in the Niger Delta, which he noted has boosted oil production, global investors such as those from France can now invest in renewable energy; gas and power infrastructure development; pipeline construction; storage facilities; and the direct sales and direct purchase of Nigeria crude oil grades. Ughamadu said NNPC as the state-owned oil and gas corporation has global operations and called for closer collaboration between it and the French government, especially in the area of consular services in order to enable its top executives and staff meet their global engagements. He also assured Gauer that the leadership at the NNPC was determined to develop a robust business atmosphere for investors.
Forte Oil Plc has said it is planning to sell shares worth N20bn to institutional and high net worth investors, and has applied for regulatory approval for the transaction.
The energy firm said on Monday that the capital raising would be done as a public offer for shares through a book-building process to help price discovery, adding that it had applied to the Securities and Exchange Commission and Nigerian Stock Exchange for approval.
It said its core investor, Zenon Petroleum and Gas Limited, owned by billionaire, Femi Otedola, with a total stake of 62.97 per cent in the company, would not participate in the offer, according to Reuters.
Nigerian companies are going through a tough time brought on by low oil prices, which tipped the economy into a recession, depleted the country’s foreign reserves, weakened the currency and caused chronic dollar shortages, thereby frustrating businesses.
Several firms, including Guinness Nigeria Plc, reported losses last year due to the weak economy, and are set to raise funds from existing shareholders.
In 2016, Forte Oil posted a 24 per cent fall in pre-tax profit, which knocked it shares down by 74.4 per cent.
This year, the shares have fallen by 34.2 per cent, giving it a market value of N68.8bn. It ended 4.98 per cent down to N52.81 on Monday, underperforming the main index, which gained 0.96 per cent.
On Monday, Forte Oil said it was on track to achieve its target for 2017 and that based on its performance so far, it could pay out half of its earnings as dividend.
It said its fuel distribution and power business accounted for 95 per cent of its operating profit and that it hoped to announce its half-year audited account before July 31.
“The outlook remains positive on the back of the renewed peace in the Niger Delta…while the passing of the Petroleum Industry Governance Bill by the Senate is another positive,” it added.
Last year, the energy firm planned to raise N100bn in debt or equity for expansion. It later sold N9bn in five-year bonds.
Nigeria’s IPO market has dried up for almost a decade following a stock market crisis with regulators struggling to revive it. In March, SEC proposed to cut listing fees to attract issuers.
Last year, stocks shed 40 per cent in dollar terms after the naira fell by a third due to the Central Bank of Nigeria’s currency curbs. This year, stocks have recovered after the CBN in April allowed investors to trade the naira at market rates.
Mutual Benefits Assurance Plc, said that it grew its underwriting income by 27per cent from N8.3 billion in 2015, to N10.7 billion for the year ended December 31, 2016.
The company, in its audited financial statement recently released on the floor of the Nigerian Stock Exchange (NSE), said its underwriting Profit (non-life and life) grew by 16 percent to N4.1 billion, from N3.6 billion in 2015, which according to it, was one of the highest in the industry.
The result also showed that the Mutual Benefit Group, paid out claims amounting to N3.3 billion, which shows 43 percent increase from the N2.3 billion paid out in 2015. This development, the company’s Chairman, Akin Ogunbiyi, said was in line with the Mutual Benefit’s commitment to honouring its obligations and delighting its customers, while improving customer service excellence .
He said that despite the challenging economy and consumer apathy towards insurance, the result was achieved through its improved risk retention policy. Other contents of the audited financial statement showed that in the year under review, the company’s investment income, stood at N966 million, representing 13 percent increase against N854 million recorded in 2015 .
Speaking on future growth plan of the company, the Head Corporate Communications of Mutual Benefit, Ellen Offo, said a few months back, Mutual Benefit Assurance, in conjunction with KPMG, embarked on a strategic five year roadmap for the company aimed at repositioning it for future opportunities and challenges. She said the plan focussed on four key areas of the company’s business, namely deepening Market penetration and customer acquisition; achieving customer service delivery excellence; transforming people and culture as well as driving operational effectiveness.
She also said that the organisation was investing in technology and developing innovative customer-centric products that meet the needs of current and potential customers, while increasing its market share.
For the first time in the history of its operation, Julius Berger Nigeria Plc recorded loss in the financial year ended December 31, 2016, posting a loss before tax of N1.239 billion, compared to a profit before tax of N6.500 billion in the 2015 financial year.
Even though it recorded an increase in turnover of N119.813 billion in 2016, compared to N119.243 billion in 2015, the chairman of the company, Mr. Mutui Summonu, said the achievement was not enough to “offset the tremendous and critical challenges” the group continued to face in the light of dwindling economic performance and greater uncertainty in the country.
Presenting the Annual Reports 2016 and Financial Statement of the company to the shareholders at its annual general meeting (AGM) in Abuja on Thursday, Summonu attributed the poor outing of the company to the persistent and increased severity of the economic hardships, specifically the large premium paid for the acquisition of foreign exchange at exorbitant rates, which resulted in the unbearable losses that absorbed the operating profit completely.
“This, coupled with the federal and state government’s continued inability to honour contractual obligations on the majority of their projects, had drastic negative effect on the company liquidity and profitability’’, the chairman of Julius Berger added.
“Consequently and regretfully with respect to the unbroken trend of dividend payment of your company, your director will not be recommending the payment of dividend for the financial year ended December 31, 2016.
“Your board and management is more focussed on ensuring the survival of Julius Berger in this harsh economic and operational environment.’’
The chairman added that the company would continue to implement its long-term strategy of diversification with regards to business segments and client mix, saying emphasis will continue to be placed on further increasing the share of private sector clients within its portfolio. According to him, “The company will continue to strengthen its presence in the power sector by enhancing its position as an engineering, procurement and construction contractor of choice. “Opportunities in other new business areas will continue to be identified and explored diligently, with negotiation already proceeding on a number of promising projects, and debt recovery measures, including extraordinary actions already initiated with the federal government, will continue to be pursued to find amicable solution.’’
He said although Nigeria currently faces tough economic times, it retains enormous potential and looks forward to expected development related to the federal government’s Economic Recovery and Growth Plan together with implementation of the 2017 budget, which are expected to serve as catalysts to pull the economy out of recession and place it on the path of sustainable growth. Summonu said the company remains hopeful for the much anticipated positive momentum of economic recovery.
The country’s equities market appreciated by 1.38 per cent at the close of trading on the floor of the Nigerian Stock Exchange on Wednesday, as 37 stocks recorded gains.
This development overturned the losses recorded in the week so far, and consequently settled the year-to-date return at 25.02 per cent. There were 22 losers.
A total of 759.046 million shares valued at N6.295bn exchanged hands in 7,357 deals.
The NSE capitalisation soared to N11.618tn from N11.46tn, while the All-Share Index settled at 33,598.20 basis points from 33,141.85 basis points.
May & Baker Nigeria Plc topped the gainers’ list for the second day in a row, advancing by 10.20 per cent, to close at a year high of N3.78, and settle the year-to-date return at 302.13 per cent.
Ashaka Cement Plc, Unilever Nigeria Plc, Unity Bank Plc and Skye Bank Plc followed, appreciating by 10.18 per cent, 10 per cent, 8.86 per cent and 8.62 per cent, accordingly.
However, International Breweries Plc slid by 4.80 per cent, thus topping the losers’ chart, to close at N28.56. This was trailed by Cutix Plc, 7UP Bottling Company Plc, PZ Cussons Nigeria Plc and Sterling Bank Plc, which depreciated by 4.62 per cent, 4.44 per cent, four per cent and 3.60 per cent, respectively.
All the NSE Indices recorded appreciations in the order of banking, insurance, oil/gas, food/beverage and industrial goods, which appreciated by 2.92 per cent, 1.55 per cent, 1.28 per cent, 1.03 per cent and 0.83 per cent, accordingly.
Commenting on Wednesday trading results, analysts at Meristem Securities Limited, in an email post, said, “After a slight hiccup in the first two trading days of the week, the Nigerian equities market recorded a positive performance as bullish activities were witnessed on most large-cap tickers.
“We however note that there were still profit taking activities on some counters that had gained in the market’s recent rally.”
Foreign currency speculators, who launched an unprecedented attack against the naira in the last two weeks, got their fingers burnt on Tuesday when the nation’s currency staged a major recovery, rising to N310 to a dollar at the close of business, compared to N375 at which it sold on Monday.
The naira fell to an all-time low of about N400 to a dollar on the parallel market last week fuelling concerns that it would plummet further to N450-N500/$ this week.
But findings from THISDAY showed that the naira defied expectations, climbing to as high as N305 to the dollar at some parallel market points in Lagos on Tuesday afternoon, before settling at N310.
Forex dealers and currency analysts attributed the significant gain on the parallel market to excess supply of the greenback in the market, even as it looked like a lot of speculators lost the shirts on their back.
THISDAY gathered from a reliable source that speculators who thought that by attacking the currency last week, coupled with misplaced concerns that the Central Bank of Nigeria (CBN) was going to stop the allocation of forex for school fees and medical bills abroad, this would compel the central bank and President Muhammadu Buhari to alter their stance against the devaluation of the currency.
But they were disappointed when Buhari, in Egypt at the weekend, adamantly ruled out the devaluation of the naira on the grounds that Nigeria does not have the competitive advantage to benefit from an official currency adjustment.
Reacting to the president’s stance, speculators who had been betting that the naira would depreciate further, started dumping the dollars with reckless abandon, effectively creating excess supply of the greenback in the parallel market.
Commenting on the situation in the secondary forex market, the chairman, Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said: “The market is moving from perception to reality.”
Similarly, an analyst at Ecobank Nigeria, Mr. Kunle Ezun, predicted that the naira would edge higher in the coming days. “We expect that the naira would appreciate further. We have always said that what happened last week was purely a speculative attack.
Some people felt that if they pushed the naira down to that level, they could force the CBN to devalue, so that when the naira is devalued and the gap widens further, they would now bring out the dollar cash to make a kill,” Ezun said. He however urged the fiscal authorities to introduce policies that would help stimulate economic activities, saying that the fundamentals of the economy were still weak.
ABCON also aligned with the federal government’s decision not to further devalue the naira. Gwadabe said this at a media briefing, pointing out that devaluing the naira would create more problems than it would solve. He said that as a way of enhancing transparency in the BDC sub-sector, his association had decided to introduce a forex rate band weekly.
This rate band is expected to serve as a guide for all BDCs and the public on the prevailing exchange rate across the country, he added. In addition, it will be operated in line with the regulated forex rate in the economy.
“This is to forestall exploitation of forex end users, and also to ensure that end users are informed to avoid falling victims of exploitation. “The band will be announced via weekly press releases that will be circulated to the media for publication.
“ABCON will introduce a series of measures aimed at transforming the operations of BDCs in Nigeria to align with global best practices. These include: review and updating of BDC operational manual; introduction of live trading platforms; automation of all transactions and documentation requirements; and increased partnership with the CBN and other relevant agencies.
“Further, as part of its responsibility as a self regulatory organisation (SRO), and also in continuation of its aim to transform its members to compete within the global regulatory currency market, ABCON will seek the approval of relevant monetary and fiscal authorities as well as partnership for effective use of the nation’s external reserves to enhance domestic trade and foreign exchange management. “To this end, our website and internet platforms will be developed to position BDCs to serve as agents of Western Union and currency auctioneers.
“We would also develop platforms that will allow our members to access sources of autonomous foreign exchange like govt agencies, embassies, IOCs and export proceeds, etc,” he explained. He also urged the federal government to introduce policies that would diversify the economy to increase non-oil export earnings, and reduce imports.
This, according to him, would lead to increased foreign exchange inflow and a reduction in demand for foreign exchange. In addition to policies that would diversify the economy, ABCON suggested that the CBN should review the policy of dollar importation into the economy for the purpose of defending the naira.
According to the association, the central bank should introduce a policy whereby the naira is used to intervene in the real sectors of the economy to boost productivity.
Furthermore, Gwadabe said as a way of reducing demand for dollars, the CBN should explore the option of promoting the use and acceptability of naira for transactions within the West African sub-region.
He added: “We observe that this is already happening at the level of informal trading activities within the sub-region, and it is our belief that this can be replicated at the level of formal economic activities.”
Meanwhile, the Chairman of Stanbic IBTC Holdings Plc, Mr. Atedo Peterside, has expressed concern over the uncertainty arising from the federal government’s foreign exchange policy, warning that it is threatening macroeconomic stability in the country and is unsustainable.
He stated this yesterday at the 2016 Standard Bank West Africa Investors’ Conference tagged, “Unlocking Nigeria’s Potential…Growth through Diversification”.
He said the federal government’s foreign exchange policy is the biggest uncertainty facing the country today following the lack of economic policy direction and the likely composition of Buhari’s economic team for much of the third and fourth quarters of last year. According to him, “The argument at stake is not whether to devalue or not because there has already been an effective devaluation.
“The naira prices of various capital goods are now being ‘correctly’ priced purely on the basis of realistic expected replacement costs and so the economy is sliding towards an unpalatable scenario where the consumer suffers the ‘pains’ of devaluation (rising prices) without witnessing any of the expected ‘gains’ such as enhanced fiscal viability (in local currency terms at least) of the three tiers of government and increased competitiveness of Nigerian businesses.”
Peterside stressed that the much-craved economic diversification could only take place meaningfully if new capital investment activity takes place to take maximum advantage of increased domestic competitiveness.
“Sadly, most investors here – local and foreign – are currently caught up in a frenzied pursuit of the cheapest available dollars and the difference between losing this game and winning it can be as high as a mind-boggling 50 per cent on new transactions.
“The pursuit of scarce forex for today’s needs has understandably become the main game in town and this has exacerbated the pressures on Nigeria’s foreign exchange reserves and the naira via the one-way bet that is currently on against the naira, that is, everybody wants to take foreign exchange out and nobody really wants to bring it in,” he added.
He further stated that the excitement caused by the important development in Nigeria’s political landscape last year, where a change in government occurred at the federal level after a keenly contested election, has given way to some apprehension surrounding whether a populist government can take the necessary tough economic policy actions that are necessary to restore confidence and stimulate badly needed new investment activity.
FINANCIAL Market Derivative Quote (FMDQ) Over the Counter, OTC, has returned to its bullish volume in the month of May 2017, recording a total transaction value of N9.49 trillion, representing a growth of 7.32 per cent from N8.79 trillion in April.
FMDQ had, from the beginning of the year recorded continuous growth, until April, 2017 when it fell to N8.79 trillion from N13.42 trillion in March, 2017. The growth pattern in the first quarter shows January declining by 13.1 per cent, but February grew by 14 per cent and March by 10.5 per cent. The return to the bullish trend in May, however, may not bring second quarter position up to N34.22 trillion recorded in the first quarter as the cumulative so far is less than half of the Q1’17.
Data from the FMDQ shows that the Treasury Bills (T.bills) segment continued to dominate, accounting for 40.73 per cent of the turnover in May as against 40.24 per cent in April, while FGN2 bonds recorded 5.23 per cent as in May against 7.19 per cent in April 2017. Activities in the Foreign Exchange (FX) market accounted for 24.88 per cent in May’s turnover as against 27.71 per cent in April while Money Market (Repurchase Agreements (Repos)/Buy-Backs & Unsecured Placements/Takings) accounted for 29.13 per cent of total turnover for the reporting period FX Market as against 22.85 per cent in April.
Transactions in the FX market settled at $6.56billion in May, a decrease of 15.03 per cent or $1.16bilion when compared with the value recorded in April at $7.72billion. The Central Bank of Nigeria, CBN sold $0.985billon through various interventions conducted during the period under review, a 49.50 per cent from the previous month worth $1.07billion.
United Bank for Africa Plc (UBA) successfully raised $500 million, though a debut Eurobond, which was 240 per cent over-subscribed. The significant investor demand reflects the strong global investor appetite for UBA’s credit and support for the Group’s pan-African financial services strategy. The Global Offering is a five-year senior unsecured benchmark bond (144A/Reg S) listed on the Irish Stock Exchange and will further support the Group’s strategic vision, as it continues to grow its franchise across the continent and client segments.
The bond, which is rated by both Fitch (B, stable outlook) and S&P (B, stable outlook), matures in June 2022 and was issued with a coupon rate of 7.75%, priced at an effective yield of 7.875%. This pricing is seen by the global investor community as the best possible pricing for a debut issue from a financial institution of Nigerian origin in current markets. The pricing was at par to the recent bond issue by the Federal Republic of Nigeria, which issued USD1 billion in March 2017.
Investor interest was global, including the United Kingdom, Europe, Asia, the Middle East and the US. Speaking on the offering, the Group Managing Director/CEO of UBA Plc, Mr. Kennedy Uzoka stated: “This successful dollar-denominated offering further illustrates global investor confidence in the strong fundamentals of our Group. The USD500 million bond will complement our stable funding base and support the growth of our balance sheet and the overall business. More importantly, this medium-term funding will further enhance our strength in financing profitable, impactful projects on the African continent.” Also commenting on the Eurobond, the Group CFO, Mr. Ugo Nwaghodoh said: “UBA’s debut global offering is another milestone for us. It is timely in the Group’s growth phase and aligns with our strategic plan to profitably grow the balance sheet, as we maintain our prudent risk management and benchmark asset quality ratios.”
The Nigerian Stock Exchange market capitalisation gained N87bn at the close of trading on the floor of the bourse as 46 stocks recorded appreciations.
The market continued its bullish trend, advancing further by 0.77 per cent, to settle the year-to-date return at 22.56 per cent. Aside of the 46 gainers, 14 losers emerged.
Similarly, the volume and market value of transactions advanced by 5.82 per cent and 18.8 per cent, accordingly.
A total of 528.692 million shares worth N4.84bn exchanged hands in 5,603 deals. The NSE capitalisation appreciated to N11.386tn from N11.299tn, as the All-Share Index closed at 32,937.98 basis points from 32,686.72 basis points.
Forte Oil Plc topped the gainers’ list, advancing by 10.22 per cent, to close at N58.33, while International Breweries Plc sustained its gains and appreciated by 10.21 per cent owing to the announcement of its merger plans.
On the top gainers’ list also were Cadbury Nigeria Plc, Seplat Petroleum Development Company Plc and Dangote Flour Plc, which appreciated by 10.15 per cent, 10.14 per cent and 10.13 per cent, accordingly.
However, Jaiz Bank Plc topped the losers’ table, depreciating by 4.71 per cent to close at N0.81. In the same vein, Golden Guinea Breweries Plc, Julius Berger Nigeria Plc, Neimeth International Pharmaceuticals Plc and Wapic Insurance Plc recorded declines of 4.71 per cent, 4.67 per cent, 4.05 per cent and 3.64 per cent, respectively.
At the close of trading, all the NSE sector indices closed positive, save for the NSE Industry and NSE Insurance indices, which declined by one per cent and 0.23 per cent, respectively.
“Although there was profit taking on large-cap counters (Dangote Cement Plc and Guaranty Trust Bank Plc), positive investor sentiments ruled the day. We expect the market to close positive week on week,” analysts at Meristem Securities Limited said in a post.
The Debt Management Office (DMO) has announced the commencement of a global offering of Nigeria’s first Diaspora Bond.
According to the News Agency of Nigeria (NAN), the DMO made this known in a statement. It said that the nation had filed a registration statement for the bonds with the U. S. Securities and Exchange Commission.
It said that application would be made for the bonds to be admitted to the official list of the UK Listing Authority and the London Stock Exchange Plc.
The office said this was to ensure that the bonds were admitted to trading on the London Stock Exchange’s regulated market.
“The bonds will be direct general obligations of Nigeria and will be denominated in U.S. dollars. “The international Joint Lead Managers are Bank of America Merrill Lynch and The Standard Bank of South Africa Limited.
“The Nigerian Joint Lead Managers are First Bank of Nigeria Limited and United Bank for Africa Plc,’’ it said.
It said there would be a series of investor meetings in the UK, the U. S. and Switzerland from June 13.
The office said that pricing was expected to occur following the investor meetings and subject to market conditions. It said that Diaspora bond was used to raise funds from Nigerians in the Diaspora to finance capital projects and provide an opportunity for them to participate in the development of the country.
As part of measures to fund capital expenditures, the Federal Government had in February announced its offering of one billion dollars euro bond under its newly-established one billion dollars Global Medium Term Note programme.
The office said that the one billion dollars euro bond, which would mature on Feb. 16, 2032, was eight times oversubscribed in the international market at an interest rate of 7.8 per cent with orders in excess of 7.8 billion dollars.