- Nigeria’s $1bn Eurobond Starts Trading on London Stock Exchange
One week after its issue, Nigeria’s $1 billion Eurobond started trading yesterday on the London Stock Exchange (LSE).
The 15-year government bond, paying a coupon of 7.875 per cent, is the longest ever maturity for an international Nigerian bond, the first international issuance for the country since 2013.
The offer was nearly eight times oversubscribed, with the order book closing at approximately $7.7 billion.
The listing secured high quality investors’ support from across the U.S. and Europe and will support Nigeria in financing its long-term infrastructure projects, a statement from the London Stock Exchange Group (LSEG) said.
“Today’s (yesterday) listing builds on the recent pipeline of several high profile sovereign, supranational, municipal and private company bond issuances on London Stock Exchange.
“In January 2017, Israel listed its largest ever Eurobond offering of €2.25 billion in London,” LSEG said.
Also commenting, the Head of Middle East, Africa and South Asia, International Markets Unit of the LSE, Ibukun Adebayo, said:
“Nigeria’s choice of London Stock Exchange for its first international bond offering since 2013 underlines London Stock Exchange’s position as a leading global venue for debt fund raising and London’s enduring status as a market open to the world.
“The success of Nigeria’s bond listing is a strong statement of international investors’ interest in building exposure to Nigeria’s economy. It reinforces London Stock Exchange’s status as a strong partner to Nigeria and the City’s ability to provide a deep additional channel of finance for the development of Nigerian infrastructure and the growth of the economy.”
The Economic Secretary to the British Treasury, Simon Kirby MP, added: “I am delighted that the Nigerian government has chosen London as the location to list its $1bn sovereign bond.
“This issuance underlines Britain’s position as the world’s leading global financial centre and strengthens our economic and financial relationship with Nigeria.”
The statement recalled that the LSEG has a long history of supporting the development of African capital markets and investment in African companies.
It listed them as follows:
• There are currently nine African sovereign bonds listed in London, from Gabon, Ghana, Namibia, Nigeria and Zambia.
• There are 111 African companies listed or trading on London Stock Exchange – more than on any other international stock exchange.
• These companies have a total market capitalisation of over US$200 billion, and in the last 10 years, have raised more than $26 billion on our markets.
• Seplat was the first Nigerian company to simultaneously dual list equity shares in London and Nigeria in April 2014.
• In November 2014, London Stock Exchange Group and The Nigerian Stock Exchange signed a capital markets agreement to support African companies seeking dual listings in London and Lagos. The agreement followed the implementation earlier in 2014 of a unique new cross-border settlement process between the UK and Nigeria.
• In March 2016, LSEG established an Africa Advisory Group, bringing together 12 distinguished business leaders, policymakers and investors from across Africa, to discuss the challenges and opportunities presented by the development of the continent’s capital markets.
• In June 2014, LSEG signed a strategic agreement with Casablanca Stock Exchange to share its expertise on the full exchange business chain, from listing to trading, and from clearing to settlement and custody with a commitment to position Casablanca’s capital markets and financial infrastructure as a regional hub.
• LSEG market infrastructure technology is deployed in more 12 African markets, including Botswana Stock Exchange, Casablanca Stock Exchange and Johannesburg Stock Exchange.
Government Revenue Surges to N2.07trn in January 2024, FAAC Discloses
The Federal Accounts Allocation Committee (FAAC) has revealed a significant surge in government revenue to N2.07 trillion in January 2024.
This substantial increase reflects the buoyancy of Nigeria’s economic activities despite various challenges faced by the nation.
According to FAAC’s communiqué issued after its monthly meeting in Abuja, the N2.07 trillion revenue was distributed to meet the financial needs of the federal, state, and local governments.
N1.15 trillion out of the total revenue was disbursed to the various tiers of government, indicating a robust financial inflow.
The breakdown of the revenue distribution showcased that the Federal Government received N407.267 billion, state governments obtained N379.407 billion while N278.041 billion was disbursed to local governments.
Also, N85.101 billion, equivalent to 13% of mineral revenue, was allocated to the states as derivation revenue.
FAAC also highlighted that the revenue composition included N463.1 billion from distributable statutory revenue, N391.8 billion from distributable Value Added Tax (VAT) revenue, N15.9 billion from Electronic Money Transfer Levy revenue, and N279.03 billion from exchange difference revenue.
Despite the impressive revenue figures, FAAC noted a decrease in VAT collection by N71.7 billion compared to the previous month.
This decrease suggests fluctuations in consumer spending and economic activities, which could be influenced by various factors such as policy changes, economic conditions, and consumer sentiment.
Furthermore, FAAC reported increases in revenue from Companies Income Tax, Import Duty, Petroleum Profit Tax, and Oil and Gas Royalties.
However, revenue from Value Added Tax, Export Duty, Electronic Money Transfer Levy, and CET Levies experienced declines during the period.
FAAC’s disclosure of the January 2024 revenue underscores the importance of prudent financial management and effective allocation of resources to drive sustainable economic growth and development in Nigeria.
Private Sector Credit Hits Record High of N76.94 Trillion in January 2024 – CBN Report
Private sector credit in Nigeria reached a record N76.94 trillion in January 2024, according to the latest report from the Central Bank of Nigeria (CBN).
This represents a 85.2% year-on-year increase from N41.54 trillion reported in January 2023.
The CBN’s Money and Credit Statistics report unveiled that credit to the private sector experienced a substantial month-on-month surge of 23.06%, or N14.42 trillion, from N62.52 trillion in December 2023.
This surge occurred amid the implementation of the CBN’s policy to unify the naira exchange rate.
Analysts attribute the reported N76.94 trillion credit to the private sector to the recent depreciation of the naira against foreign currencies.
The naira closed at N1,356.88 per dollar in January 2024, representing a 50.87% decline or N457.49 against the dollar compared to December 2023.
This depreciation compelled banks to extend credit to major corporations to meet the CBN’s mandated Loan-to-Deposit Ratio (LDR) threshold.
The CBN’s decision to resume the enforcement of the LDR policy, effective July 31, 2023, further propelled banks to increase lending to customers, stimulating the real sector of the economy.
With the CRR mechanism updated, banks with an LDR below the prescribed level faced a 50% lending shortfall penalty.
Experts suggest that the significant increase in private sector credit underscores the growing need for businesses to secure funds amidst economic uncertainties and exchange rate volatility.
It also signifies banks’ efforts to comply with regulatory requirements and support economic growth initiatives.
As Nigeria navigates its economic landscape, stakeholders anticipate further developments in credit dynamics and monetary policies to sustain financial stability and stimulate economic expansion.
Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration
The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.
The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.
The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.
The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.
There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.
The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.
Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.
The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.
It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.
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