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Nigeria, Others Raise Over $17bn from Bonds, Says World Bank

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  • Nigeria, Others Raise Over $17bn from Bonds, Says World Bank

Nigeria, Kenya, Côte d’Ivoire and other sub-Saharan African countries raised over $17bn from bond issuances in 2018 in what the World Bank described as a landmark development.

In a report, titled ‘Africa’s Pulse,’ produced by the Office of the Chief Economist for the African Region at the World Bank and released during a recent joint Spring Meetings with the International Monetary Fund in Washington DC, the bank revealed that over $17bn had been raised from bonds by sub-Saharan African countries while warning of increasing debt vulnerabilities.

The World Bank said, “In sub-Saharan Africa, 2018 marked a record year for international bond issuances. Between 2013 and 2017, countries in the region (excluding upper middle-income countries) issued, on average, a total of $4.5bn per year, with an average issuance size of $1bn. In 2018, bond issuances totalled more than $17bn, with the average issuance rising to nearly $3bn.

“In addition to the increase in issuance volumes, several countries (Côte d’Ivoire, Kenya, Nigeria) were able to extend maturities to 30 years.”

The Federal Government in November 2018 said it received a combined offer of over $9.5bn for its $2.86bn Eurobond. The bond represents Nigeria’s sixth Eurobond issuance, following issuances in 2011, 2013, two in 2017 and one in early 2018 and its first triple-tranche offering.

The Ministry of Finance said the offer comprised a $1.18bn seven-year series, $1bn 12-year series and a $750m 30-year series. It added that the government intended to use the proceeds of the bond towards funding its fiscal deficit and other financing needs.

The Minister of Finance, Mrs Zainab Ahmed, revealed during the ministerial briefing at end of the World Bank/IMF Spring Meetings that the country would later in the year issue N15bn green bond, having successfully raised N10.92bn in December 2018.

The Governor, Central Bank of Nigeria, Godwin Emefiele, said the country attracted bonds worth $6bn after the elections, a sign that the Nigerian bond market remained attractive to investors.

“Following the successful conduct of the general elections in February 2019, over $6bn has come into the local bond market, indicating continued confidence in the strength of the Nigerian economy by investors,” Emefiele added.

While mentioning the Bloomberg’s emerging-market local-currency government bonds index, which covered major emerging markets such as Nigeria, South Africa and Argentina, he stated that Nigeria’s bond continued to top the chart due to the stability of the Investors’ & Exporters’ FX Window rate and the yields being high by emerging-market standards.

In spite of this development, the World Bank had warned sub-Saharan African countries of increasing debt levels and its attendant vulnerabilities.

“As of end-2018, nearly half of the countries in sub-Saharan African covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013. In addition, safety margins have decreased in several countries rated as at moderate risk of debt distress,” it stated in Africa’s Pulse report.

This was re-echoed by the Financial Counsellor and Director, Monetary and Capital Markets Department, IMF, Tobias Adrian, while presenting the Global Financial Stability Report at the spring meetings.

He said, “Nigeria has been borrowing in international markets but we worry. So, on the one hand, that is very good because it allows Nigeria to invest more; but on the other hand, we do worry about rollover risks going forward.

“At the moment, funding conditions in economies such as Nigeria and other sub-Saharan African countries are very favourable but that might change at some point. And there is a risk of rollovers and there is the risk of whether these needs for refinancing can be met in the future.”

Though the country’s total debt profile as of December 31, 2018, stood at N24.387tn, the finance minister said there was no cause for alarm.

At a high-level business meeting with the US business community held under the auspices of the Corporate Council for Africa, Ahmed pointed out that although the country’s debt level had been on the rise, Nigeria had no debt problem rather the challenge was in the area of revenue generation.

The CCA is at the forefront of strengthening and facilitating the commercial relationship between the US and the African continent. The audience was made up of top US investors, some of them already doing business in Nigeria.

“Our debts are at the levels that are sustainable; what we are trying to do is to increase our revenues. Our borrowings have been used to fund critical infrastructure, which will help to expand our capacity to grow and generate more resources for the country,” she added.

Ahmed emphasised that Nigeria’s debt levels were within approved fiscal limits, as the government was committed to its fiscal sustainability programme.

Similarly, a business mogul and legal practitioner, Jimoh Ibrahim, backed the minister, saying the country should borrow big because its debt-to -GDP ratio was relatively low.

In an interview with our correspondent in Washington DC, he said, “Nigeria’s debt is now equal to Ghana’s debt. Though Nigeria and Ghana are now equal in terms of debt, our population is different. Ghana is over 21 million, while Nigeria has 186 million.

“This means that Ghana is clever enough to get more money and put in infrastructure and if you go to Accra, you will see a lot of things happening. What is Nigeria supposed to do? Nigeria needs to get a very clear legal instrument for infrastructure, and then do a budget for the next 20 years on what to spend on infrastructure.”

He suggested that Nigeria should borrow $40bn, ask for a moratorium of 10 years and borrow for 25 years and put all the money into infrastructure.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Nasdaq Set To Launch Options Trading For Coinbase Global

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Less than a week after the largest crypto exchange in the U.S. Coinbase was listed, Nasdaq is set to start trading options for Coinbase Global.

According to Reuters, a representative for Coinbase stated that the COIN.O options will start trading on Nasdaq on Tuesday, April 20.

The launch of equity options will offer a new way for investors to bet on the fortunes of Coinbase. Equity options represent the right, but not the obligation, to buy or sell a stock at a certain price, known as the strike price, on or before an expiration date.

The news follows Coinbase’s direct listing, which saw the firm’s stock fluctuate between a valuation of $429.54 and $310 on its first day of trading.

It was reported that the Chief Executive Officer of Coinbase, Brian Armstrong sold less than 2% of his holdings which worth about $292 million in shares on COIN’s first day of trading. According to filings made with the U.S. Securities and Exchange Commission, Armstrong sold 749,999 shares in three batches at prices ranging from $381 to $410.40 per share for total proceeds of $291.8 million.

It was also reported that insiders dumped nearly $5 billion in COIN stock shortly after it was listed. Filings on the Coinbase Investor Relations website showed a total of 12,965,079 shares were sold by insiders, worth over $4.6 billion at COIN’s $344 share price at close on Friday.

Yahoo Finance reported the stock has slumped 22.5% from a high of $429.54 on April 14 to a current after-hours trading price of $332.75 where it appears to have settled after Monday’s trading session.

On April 20, Coinbase Pro announced that will add support for new trading pairs for Basic Attention Token (BAT), Cardano (ADA), Decentraland (MANA), and USDC from April 20. The four assets will be paired with three fiat currencies (USD, EUR, GBP), BTC, and ETH, with limited trading functionality to be made available while market liquidity is assessed at launch.

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Banking Sector

Unity Bank Grows Asset by 67.90% to N492.02 Billion, As Gross Earnings Hit N42.71 Billion in FY 2020

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Unity Bank Plc grew its assets base to N492.02billion representing a significant increase of 67.90% from the N293.05 billion of total assets value recorded in 2019. This is even as the agric-focused lender declared gross earnings of N42.71 billion within the period under review.

A review of the Bank’s audited results for full-year ended 31 December 2020, released to the Nigerian Stock Exchange, showed that the Bank improved its bottom line marginally as Profit After Tax, PAT stood at N2.09 billion. Profit Before Tax, PBT closed at N2.22 billion, in a year that was defined by the unmitigated impact of global pandemic characterized by disruptions in business activities and the general downturn that resulted in revenue/returns dip in major leading sectors globally.

The lender substantially grew its customers’ deposit portfolio to N356.62 billion, up from N257.69 billion in the corresponding period of 2019, representing a 38.4% growth. This affirms positive market uptake of the Bank’s product offerings, as well as the lender’s growing customer base to its recent aggressive push with agile customer-centric products, which has played a role in deepening financial services penetration, especially to a wider world, an underserved spectrum of the retail market.

Other major highlight of the audited financial statement relates to growth in its net operating income which rose to N25.46 billion from N23.21 billion in the corresponding period of 2019, representing a 9.71% increase. This is even as the net interest income recorded a significant jump, as it rose by 7.60% to N17.75 billion from N16.49 billion in the corresponding period of 2019. Earnings per Share closed at 17.85 Kobo.

The Bank’s gross loans portfolio increased by 92.9% to N206.2 billion in December 2020 from N106.9 billion in December 2019. The Bank’s lending strategy was specially tailored to support the nation’s food agenda. This had the added advantage of improving food security across the country, providing employment to thousands of youths and entrepreneurs, contributing to the conservation of FX stocks and mitigating security challenges by ensuring adequate empowerment of citizens and deepening skills acquisition across the value chain.

Commenting on the result, Unity Bank’s Managing Director/Chief Executive Officer, Mrs. Tomi Somefun stated that the results showed the resilience of the Bank during unprecedented times of uncertainties and our ability to innovate and focus on key balance sheet items that will enable us to maintain the growth trajectory.

She further opined that: “Consequently, for the year under review, the opportunities to significantly create more quality assets for the business, thought to have a sustainable impact, informed part of choices made and we have seen some encouraging market uptake in this regard, apart from the benefits to the enterprise bottom-line that have also started trickling in. Other key performance indicators especially on the liability side of the business were equally not left out. The Bank deployed new product features and augmentation supported by omni-channel, USSD promotions and other channels to enhance services delivery efficiency, drive income generation capacities and enhance steady balance sheet growth for the year”.

Looking ahead, Somefun stated: “we will latch on targeted strategies to deploy significant investment in technology in order to ride the waves of the COVID-19 pandemic. On the back of this, the Bank focuses on achieving major efficiency gains, deepening its retail footprints and penetrating identified cluster market segments, as bulwarks to tapping into various youth markets platforms, in addition to the mass market would get a further boost”.

While laying an outlook for the future, the Unity Bank’s Chief further stated: “The Bank is also looking to consolidate on the gains from its core business areas and niche in the agribusiness sector. The Bank has solidly financed over one million farmers over the past three years. These farmers cut across several primary crop production such as rice, maize, cotton, wheat, sorghum, etc coupled with their rich value chains, and we hope to continue to expand on this as we play our part in driving the country’s quest for self-sufficiency in food production.”

Analysts are of the view that has made an appreciable impact in the agribusiness and its value chains consistently, the market is excited that the current year performance and different initiatives of the Bank show that the agribusiness is bankable not only as a differential positioning but also for sustainable business performance and profitability.

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Banking Sector

Access Bank To Acquire BancABC Botswana

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Access Bank Plc on Monday disclosed that it had entered into a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).

The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter.

ABC Holdings is a subsidiary of London Stock Exchange listed group – Atlas Mara Limited.

Access Bank disclosed this in a statement signed by its Company Secretary, Sunday Ekwochi.

Bostwana is renowned for its quality sovereign credit rating and stability. Access Bank’s market entry is expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade in payments across southern Africa and Sub-Saharan Africa more broadly.”

Commenting on the deal, the GMD/CEO, Access Bank, Herbert Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.

“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more complete set of banking solutions to its clients active in and across the SADC and COMESA regions.

“This transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Bostawana to Access Bank.”

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