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DMO Allots N2.1bn FGN Savings Bonds to Retail Investors

by Radarr Africa
written by Radarr Africa

FGN savings bonds worth N2.1 billion were allotted to retail investors in the Nigerian capital market by the Debt Management Office (DMO).

This information was disclosed by the debt office in a notice issued on Wednesday.

Last week, the agency opened subscriptions for the papers for low-income earners in the country. The exercise was on for one week.

Two tenors of two years and three years were offered for sale during the bond sale for this month and from the details of the exercise, investors showed a strong appetite for the longer maturity.

The DMO said it allotted N530.7 million to 484 successful subscribers of the two-year papers at 11.04 per cent and allotted N1.6 billion to 620 subscribers of the three-year notes at 12.04 per cent.

A few years ago, the debt office created the FGN savings bonds for low-income earners after the Central Bank of Nigeria (CBN) stopped the sale of treasury bills to the category of investors.

Before the action, investors were able to buy T-bills for as low as N10,000 but the apex bank raised the minimum subscription to N50 million, making it impossible for most low-income earners to invest in the asset class.

In order to fill this vacuum, the DMO came up with the savings bond and started selling in the first week of the new month. Prior to the advent of the retail bond, the debt office only sold sovereign bonds to investors with the minimum subscription at N50 million.

Source: Business post

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AfricaAFRICA NEWSBusinessEconomyEgyptNewsNorth AfricaNorthern Africa

Egypt seeks to issue $500M in Chinese bond, $1.5-$2B in sovereign sukuk

by Radarr Africa
written by Radarr Africa

Egypt is looking forward to issuing bonds in Chinese yuan – Panda worth more than $500 million, Minister of Finance, Mohamed Maait, stated Monday.

On the sidelines of a conference to present the financial performance indicators for the current fiscal year’s budget, Maait added that Egypt is ready to issue sovereign sukuks of about $1.5 to $2 billion.

He stated that the international markets are not suitable at the present time in terms of liquidity and cost.

In March, the Ministry of Finance announced the return to the international bond markets, despite the repercussions of the Russian-Ukrainian crisis and the unprecedented global economic challenges it poses.

The Ministry of Finance stated that Egypt would thus be a leader in the Middle East in this field; as it is the first country to issue international bonds denominated in Japanese yen currency in Japanese markets. 

According to the statement, Japanese multinational banking and financial services institution Sumitomo Mitsui Banking Corp will manage the transaction.

The yen-denominated five-year debt targets a yield of between 0.80 percent and 0.85 percent.

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AfricaAFRICA NEWSBusinessEconomyGhanaNewsNigeriaWestern Africa

Yields on Ghana’s bonds to surge, highest among emerging economies

by Radarr Africa
written by Radarr Africa

Yields on Government of Ghana bonds are expected to surge further as investors perceive the fiscal state of the Ghanaian economy as risky.

According to Bloomberg, investors are demanding a lofty premium to hold Ghana’s local-currency bonds as they await details of an economic programme with the International Monetary Fund.

The economy has so far witnessed worrying instability with inflation soaring to highs since 2003 and the cedi depreciating at a rapid pace to almost 39%.

Many investors have dumped cedi-denominated assets and seeking haven in the American‘greenback’.

According to Bloomberg indexes that track key markets, yields exceeded 34% and is the highest in the developing-nation asset class.

“Local bond yields remain entrenched above 31% yield for the short end and higher for rest of the curve”, Joe Delvaux, an emerging-markets distressed debt portfolio manager in London at Amundi said.

He added that “the key element remains the discussions with the International Monetary Fund, and hopefully the ensuing funded programme. At this stage, the broader market will be waiting to see what the outcome of the IMF discussions are, the programme details and what the economic assumptions that would underpin it”.

Ghana begun discussions with the International Monetary Fund for an economic programme, after authorities describe the economy as going through difficulties as a result of Covid-19 pandemic and the Russian/Ukraine war.

However, some analysts have attributed the challenges facing the economy to the rising debt level which hit ¢393.4 billion in June 2022 as well as the inadequate revenue and expenditure spillages. This has resulted in interest payments of about ¢42 billion this year alone.

Treasury yields near 30%

Already, yields on Treasury bills have neared 30% and still going up.

The rising yields come with increased costs for the government as interest expenses may likely go up.

Government will spend about ¢42 billion to service debt in 2022.

Source: My joy online

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AfricaAFRICA NEWSBusinessMarketsNewsNigeriaWestern Africa

SEC Nigeria proposes corporate bonds exemption from tax

by Radarr Africa
written by Radarr Africa

The Securities and Exchange Commission (SEC) Nigeria, has asked the federal government to consider its proposal to exempt corporate bonds from tax payment to boost liquidity in the Nigerian capital market.

Recall that in 2012, the central government exempted bonds and short-term government securities from income tax for 10 years, which recently expired on January 1, 2022.

At the moment, only government securities are tax-free as investments in debt instruments issued by corporate organisations attract tax payments.

But the Securities and Exchange Commission (SEC) is asking the government to again exempt corporate bonds from tax payment to unlock the attractiveness of the corporate bond market.

Speaking over the weekend after the second Capital Market Committee (CMC) meeting for this year, the Director-General of SEC, Mr Lamido Yuguda, said this move would encourage more companies to approach the capital market for their funding needs.

“The Nigerian capital market community held its second Capital Market Committee (CMC) Meeting for the year on Thursday, August 18, 2022. The meeting was well attended by over 300 capital market operators and we had very robust deliberations.

“We observed that the world is facing high inflation and low growth. Consequently, the World Bank, the International Monetary Fund and other Economic forecasters are trimming down growth estimates with forecasts reflecting sizable downgrades to the outlook for the rest of the year and 2023.

“The commission continues its engagement with the Minister of Finance, Budget and National Planning on the request for tax exemption for corporate bonds,” he said.

He added, “For any asset class, the investment is a function of many considerations. Tax is just one of those considerations. Although it is only one, it is an important consideration especially when the tax rate is high.

“So, I think for now, given that there are so many considerations, and considering all these factors, we feel the tax rebate should be reinstated and we have been working with the tax and fiscal authorities to advocate the return to the status quo.”

The SEC DG also said that the revised Capital Market Masterplan would be launched by November following its approval by the federal government.

The Capital Market Master Plan Implementation Council had in June this year submitted the revised Nigerian Capital Market Master Plan (2021 -2025) to the Minister of Finance, Budget and National Planning.

Mr Yuguda assured that despite the harsh operating environment, the commission will continue to strive and fulfil its mandate of protecting investors and creating an enabling environment for market operations.

The SEC boss urged all stakeholders to continue to work towards reducing the volume of unclaimed dividends and reiterated that stiff penalties will be meted out to any stakeholder whose action appears to frustrate the efforts of the Commission on this objective.

He lamented that despite the commission’s efforts in the implementation of the Electronic Dividend Mandate Management System, investors have continued to lament the delayed payments of e-dividend and the cumbersome manual process among other shortcomings.

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“A large number of investors are also still unaware of the eDMMS and have not mandated their accounts. The commission will, however, continue to create awareness in this regard.

“Capital market operators must also do more to demonstrate, through their activities, an efficient capital market that prioritizes the interests of investors,” he added.

As part of its efforts to stem the tide of fraudulent activities of unregistered investment crowdfunding platforms, the SEC DG at the briefing warned operators of such platforms that they stand the risk of being prosecuted.

He said, “The commission has an existing regulatory framework that permits private companies with the required structure and mechanism to raise capital from the public through crowdfunding. All crowdfunding platforms must register with the agency.

Source: Business post

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AfricaAFRICA NEWSBusinessNewsNigeriaWestern Africa

DMO auctions 3 FGN bonds worth N225bn

by Radarr Africa
written by Radarr Africa

The Debt Management Office (DMO) has announced the listing of three Federal Government of Nigeria bonds valued at N225 billion for a subscription via auction at N1,000 per unit.

This was announced on Friday in a statement issued in Abuja.

According to the statement, the first offer for N75 billion had been previously issued and has a maturity date of March 2025 at an interest rate of 13.53 percent per annum (10-year re-opening).

There is also the N75-billion bond maturing in April 2032 at an interest rate of 13.5 percent (10-year re-opening).

Also, the third one is N75 billion, maturing in January 2042 at an interest rate of 13 percent per annum (20-year re-opening).

DMO explained that the bonds are subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

“For re-opening of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument.

“Interest is paid semi-annually while the bullet payment is made on maturity,’’ it stated.

The DMO added that the bonds qualify as securities in which trustees could invest under the Trustee Investment Act.

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“They qualify as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act; and for Tax Exemption for Pension Funds Administrators, among other investors.

“They are listed on The Nigerian Stock Exchange and qualify as assets for liquidity ratio calculation for banks,” it added.

“They are backed by the full faith and credit of the Federal Government and charged upon the general assets of the country,’’ it noted.

Source: NAN

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AfricaBusinessNewsNigeriaWestern Africa

Investors cut patronage of FGN savings bonds by 27%

by Radarr Africa
written by Radarr Africa

Investors have reduced their patronage of Federal Government of Nigeria Savings Bonds by 27 per cent following the 13 basis points, bpts, cut in interest rate by the Debt Management Office, DMO.

The debt agency had reduced  the average interest rates on the FGN Savings Bonds, FSBs, by 13 bpts to  8.58 per cent at the July auction from 8.71 per cent at the June auction.

The interest rate on the 2-yr and 3-year FSBs were both reduced by 13 bpts to 8.075 per cent and 9.075 per cent respectively in July from 8.205 per cent and 9.205 per cent in June. 

following the two consecutive hikes in the Monetary Policy Rate, to 14 per cent in July by the Monetary Policy Committee of the Central Bank of Nigeria.

It also represents a reversal from the 26 bpts increase to 8.71 per cent on average interest rate on FSBs in June from 8.45 per cent in May.

In apparent resistance to the cut in interest rate by the DMO, patronage for the FSB dropped by 27 per cent at the July auction, as total allotment fell to N1.37 trillion from N1.87 trillion in June. 

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The 2-year FSB recorded the largest decline of 41 per cent, as allotment fell to N451 billion in July from N769.9  billion in June. The 3-year FSB recorded a 17 per cent decline to N915.86 billion in July from N1.1 trillion in June. 

The FGN Savings Bonds, FSBs,  was introduced by the Debt Management Office, DMO, on behalf of the Federal Government, as  a retail savings product accessible to all income groups.

Furthermore, the FSB was introduced to deepen the national savings culture and diversify funding sources for the Government.

The FSBs are issued monthly in tenors of 2 and 3 years.  Minimum subscription is N5,000 with additions in multiples of N1,000, subject to a maximum of N50 Million. The FSBs are issued at an interest rate indicated in the offer announcement and  interest is paid quarterly to investors.

Source: Vanguard

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AfricaBusinessDangote IndustriesNigeriaWestern Africa

Dangote Industries completes issuance of N187.6bn bond

by Radarr Africa
written by Radarr Africa

Dangote Industries Limited, DHL, has successfully completed its N187.6 billion series 1 bond issuance which is the largest corporate bond ever issued in the history of the Nigerian capital market.

This landmark transaction represents the first issuance by DIL at Group level and comprises of a 7-year Tranche-A bond issued at 12.75% and a 10-year Tranche-B bond issued at 13.50%, under the newly established N300 billion Debt Issuance Programme.

The bond issuance was well received by the market and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors. DIL plans to utilize the net proceeds from the Series 1 bond issuance to part-finance the Dangote Petroleum Refinery Project, an Integrated Petrochemical Complex, and the largest Single Train Petroleum Refinery in the World.

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Standard Chartered Capital & Advisory Nigeria Limited acted as the Lead Issuing House and Bookrunner on Transaction, while Meristem Capital, Stanbic IBTC Capital, Vetiva Capital, Absa Capital Markets, Afrinvest Capital, Coronation Merchant Bank, Ecobank Development Company, FBNQuest Merchant Bank, FCMB Capital Markets, Greenwich Merchant Bank, Quantum Zenith Capital, Rand Merchant Bank Nigeria and United Capital acted as Joint Issuing Houses.

Commenting on the significance of the Transaction, Mr. Olakunle Alake, Group Managing Director of Dangote Industries, said: “The success of this transaction further demonstrates investor confidence in our credit story and the appreciation of the work done by the Group across several key sectors that are crucial to the development of the continent. The proceeds from this landmark transaction will be used to part-finance the Dangote Petroleum Refinery Project which is the initiative by the Group to establish the largest refinery in Africa, thus positioning Nigeria as a net exporter of refined crude.”

Source: Vanguard

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AfricaBuildingDangote IndustriesNigeriaWestern Africa

Dangote Cement lists N116b bonds

by Radarr Africa
written by Radarr Africa

Dangote Cement Plc has listed three tranches of bonds worth N116 billion on the Nigerian Exchange (NGX), paving the way for the bondholders to trade on them.

The bonds were issued under the company’s N300 billion multi-instrument debt issuance programme.

The listed bonds included N4.27 billion five-year 11.85 per cent fixed rate senior unsecured bonds due 2027,  the N23.34 billion seven-year 12.35 per cent fixed rate senior unsecured bonds due 2029 and the N88.4 billion 10-year 13.00 per cent fixed rate senior unsecured bonds due 2032. The bonds were issued and listed at a par value of N1000 each.

According to the listing, the three bonds were issued on April 27, 2022 and will thus mature April 30, 2027; April 30, 2029 and April 30, 2032 respectively.

The bonds were offered to qualified institutional investors and high net worth investors through a book building method, a process of order-based accrual of subscriptions.                 

Dangote Cement is sub-Saharan Africa’s largest cement producer with an installed capacity of 45.6 metric tonnes per annum across 10 African countries. It operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales, and distribution of cement.

Dangote Cement has a long-term credit rating of AA+ by GCR and Aa2.ng by Moody’s due to its position, significant operational scale and strong financial profile evidenced by the company’s operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cash flow and low leverage.

Key extracts of the audited report and accounts of Dangote Cement for the year ended December 31 2021 showed that turnover rose from N1.03 trillion in 2020 to N1.38 trillion last year. Nigeria’s contribution to group sales increased from N719.95 billion in 2020 to N993.3 billion last year. Other African operations contributed N397.32 billion in 2021 as against N318.68 billion in 2020.

The group sales volume stood at 29.3 metric tonnes, with Nigeria accounting for 18.61 metric tonnes while operations in other countries contributed 10.86 metric tonnes. Gross profit stood at N538.37 billion while net profit after tax closed 2021 at N364.44 billion.

Source: The Nation

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