FG DOMINATES NSE BOND MARKET, RAISES N2.98TN…PLANS N510BN IN Q1
The Chief Executive Officer, Nigerian Stock Exchange, Mr Oscar Onyema, said capital raising at the NSE was dominated by the Federal Government in 2019 as it raised N2.98tn. Onyema, while speaking at the 2019 market recap/2020 outlook, said on Monday the Federal Government accounted for over 60 per cent of bond issuances on the NSE in a bid to finance fiscal and infrastructure deficits.
He stated that the total amount of bonds issued in 2019 were N3.10tn, of which 60 per cent (or N1.86tn) was raised by the Federal Government through new listings of bonds. The Federal Government also issued N1.12tn supplementary bonds on the NSE, which represented 36 per cent of the total amount of bond issuances. Corporate bonds accounted for four per cent (or N124m) of the total amount of bonds issued in 2019.
The Federal Government is also billed to issue about N510bn worth of bonds in the first quarter of the year. The Debt Management Office in a schedule said the bond issuance would be between N420bn and N510bn. It said the bond offers would be made on January 22, February 18 and March 25, where the APR 2023, APR 2029 and APR 2049 bonds would be reopened.
According to the schedule, the Federal Government would be offering about N45bn to N55bn each month on the APR 2023 and APR 2029 bonds at 12.75 per cent and 14.55 per cent respectively. On the APR 2049 bonds, it said about N50bn to N60bn would be offered in each month at an interest rate of 14.80 per cent.
Analysts at United Capital Plc said in their 2020 outlook reported that the fixed income market would be a corporate/private issuer market due to the buoyant level liquidity and the low-yield environment. They said yields on the FGN treasury bills were projected to stay in the mid-to-high single-digit levels and bonds yields at low double-digit levels, especially in the first half of the year.
According to them, interest in riskier assets, mostly corporate papers, will increase while the rate on Open Market Operation bills (solely for Foreign Portfolio Investors and banks) are unlikely to witness significant changes. This, they said, was due to the continued efforts of the Central Bank of Nigeria to deploy its set of unconventional policy tools to attract the FPIs and limit an impending dollar outflow in the first quarter of the year while preserving the stock of reserves above the $30bn threshold.
They said the sovereign yield curve was expected to remain normal in the first half of the year, which might reverse to a hump-shaped curve from the third quarter.