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Russia Says it Pays $649.2 Million Bond Payment in Rubles

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Rubble

Russia on Wednesday disclosed it has paid $649.2 million for bonds maturing this month and in April 2042 in Rubles after foreign banks rejected dollar payments sent earlier, Russia’s Finance Ministry disclosed, according to a Bloomberg report.

The ministry said it sent dollar payments earlier but they were rejected, leaving the country with no option than to use domestic financial institutions. The ministry added that it transferred the full payment in rubles to the National Settlement Depository.

The Finance Ministry said it “considers it fulfilled its obligations in full.”

On Monday, the United States halted the Russian government from paying its $600 million maturing bond from its foreign reserves held in U.S banks.

The decision was meant to pressure Moscow and subsequently hurt the Eastern nation’s economy for invading Ukraine on February 24, 2022.

“What they’re basically tying to do is force their hand and put even more pressure on (to deplete) foreign-currency reserves back home,” said David Wolber, a sanctions lawyer at Gibson Dunn in Hong Kong.

“If they have to do that, obviously that takes away from Russia’s ability to use those dollars for other activities, in essence to fund the war.”

 

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Ecobank Redeems 5-year US$400 Million Convertible Debt

Ecobank Transnational Incorporated (ETI) has redeemed its 5-year US$400 million debt issued in 2017 to all holders, the bank said in a regulatory filing released on Tuesday.

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Ecobank - Investors King

Ecobank Transnational Incorporated (ETI) has redeemed its 5-year US$400 million debt issued in 2017 to all holders, the bank said in a regulatory filing released on Tuesday.

The Lomé-based parent company of the Ecobank Group, announces today that it has repaid upon maturity the 5-year US$400 million convertible debt issued in September and October 2017.

According to the bank, the holders of the convertible debt did not exercise their option to convert their holdings into ordinary shares during the conversion period of 19 October 2019 to 13 October 2022.

As a result, ETI redeemed the debt at 110% of the principal amount, in line with the terms of the convertible debt agreements.

In addition, the repayment did not affect ETI’s regulatory capital since the debt had been fully amortised for capital in 2021.

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Debt Management Office Offers Two FG Savings Bonds for October

The Debt Management Office (DMO) has declared opened two Federal Government Savings Bond Offers for October 2022.

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Bonds- Investors King

The Debt Management Office (DMO) has declared opened two Federal Government Savings Bond Offers for October 2022.

In a statement released by the DMO on Tuesday, Federal Government is offering a 2-Year FGN Savings Bond due October 12, 2024 at 11.382% per annum interest rate and 3-Year FGN Savings Bond due October 12, 2025 at 12.382% per annum interest rate.

The opening date for subscription was set as today, October 4, 2022 and the closing date was three days after, October 7, 2022.

According to DMO, the settlement would be done on October 12, 2022 while coupon payment dates are January 12, April 12, July 12, and October 12.

Unit of Sale was set at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50,000,000.

Meanwhile, the Director-General of DMO, Patience Oniha DMO, during a presentation at an executive course on budgeting and fiscal responsibility organised by the Fiscal Responsibility Commission in Abuja, has said the federal government cut down on borrowings by increasing revenue generation and improve on expenditure.

In her paper titled “Debt Sustainability Challenges and Strategic Revenue Mobilisation Initiative”, Oniha explained that because the federal government had run deficit budgets for many decades, borrowings from external and domestic sources are unavoidable.

She said: “A budget may be surplus, balanced or deficit. Nigeria has run deficit budgets on a consecutive basis for decades.

“The financing of the deficits through borrowing from local and external sources is the principal reason for the growth in debt stock and debt servicing.

“One way to reduce budget deficits is to grow revenues; the other way is to prioritise expenditure and cut waste and leakages.”

 

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A Satisfactory Bond Auction for the DMO

DMO offered N225bn but raised N229.2bn through re-openings of the 2025, 2032 and 2037 FGN bonds

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Director General DMO - Investors King

The DMO held its monthly auction of FGN bonds on Monday (19 September ’22). It offered N225bn but raised N229.2bn (competitive allotment only) through re-openings of the 2025, 2032 and 2037 FGN bonds. The participation level was slightly lower when compared to the auction held in August.

The bid-to-cover ratio for September stood at 1.1x compared to 1.2x in August. The DMO secured a total bid of N246.4bn (USD564m) at the auction. The bids for the 3, 10 and 15-year benchmarks were allotted at the marginal rates of 13.5% (previously; 12.5%), 13.8% (previously; 13.5%) and 14.5% respectively.

The demand at this auction is partly driven by expected inflows of N166bn in coupon payments later this month as well as, improved system liquidity primarily driven by inflows of N185.8bn in FGN bond coupon payments in the first three weeks of September.

Coronation Merchant Bank’s economic research team note that market liquidity stood at a surplus of N28.3bn on Monday (20 September ‘22). Overnight and repo rates closed within a range of 9 – 11%.

The DMO had set out to raise N1.8trn through FGN bonds by end-Q3 ’22. However, yearto-date, it has raised N2.3trn, exceeding its target by 15% or N268bn. Considering the sale of other debt instruments such as NTBs and savings bonds, the DMO is on track pro rata to meet or exceed its domestic borrowing target (N3.53trn) for the year.

According to the DMO’s latest public debt report, total domestic debt increased by 5% q/q and 20.6% y/y to N26.2trn as at Q2. The increase can be partly attributed to increases in FGN bonds (6.7% q/q), NTBs (2.2% q/q) and FGN Savings bond (15.2% q/q).

FGN bonds accounted for 72.5% of total domestic borrowings in Q2. We maintain our view that the FGN is likely to depend on domestic borrowing to meet its fiscal deficit due to unfavourable external conditions.

Coronation Merchant Bank’s economic research team see mid-curve FGN bond yields around 13.0 – 14.0% and yields at the longer-end of the curve between 14.0% – 15.0% over the next one month. However, the level of system liquidity (impacted by items such as auctions, CRR debits/refunds, bond/NTB maturities, coupon payments and FAAC allocation) would also influence movement in yields.

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