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Debt: FSDH Urges FG to Issue Zero-coupon Bonds

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  • Debt: FSDH Urges FG to Issue Zero-coupon Bonds

The FSDH Merchant Bank has suggested that the Federal Government should consider issuance of zero-coupon bonds to manage the high interest expenses on the debt.

It stated this in its monthly economic and financial markets outlook titled, ‘Economy in need of boosters: Priorities for a second term.’

Part of the report read, “In order to manage the high interest expenses on the debt of the Federal Government relative to its current revenue, it should consider issuance of zero-coupon bonds. Such bonds and other bond issue going forward, should be tied to specific projects that have economic value addition to the country. And there should be a mechanism to assess that debt contracted is used for intended projects.”

It quoted available figures from the Central Bank of Nigeria, which showed that Nigerians spent a total of $33.04bn between 2009 and 2018 as personal travel expenses on education and health-related issues.

This amount increased the demand pressure in the foreign exchange market, it added.

The FSDH said the amount could have been saved if the health and education sectors in Nigeria were well funded.

It mentioned the need for developments of the solid mineral sector in Nigeria in order to expand the revenue base of the country and also earn more foreign exchange.

The FSDH Research recommended a model where the government would partner with the private sector to invest in the exploration in the sector and after gathering adequate data on reserves, government could sell mining licence.

“Development of the solid minerals would also help boost the economies of the states of the federation since all of states in the country had at least one solid mineral,” it stated.

The report added that the government should reintroduce tolls on the federal highways in order to source funds for road maintenance across the country.

The FSDH also said the government should consider crude oil swap arrangements with construction companies either local or foreign, for road or rail construction across the country.

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 long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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DSS Arrests EFCC, Acting Chairman, Magu

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Dss Arrests Ibrahim Magu

DSS Arrested Magu, the Acting Chairman of EFCC

The Department of State Services (DSS) has arrested the acting chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, on allegation bordering on financial misappropriation, abuse of power and embesslement.

The Acting Chairman was accused of siphoning part of the money recovered from looters, a Punch reported stated.

The report stated “It was learnt that the security details to Magu put up a stiff resistance during the arrest of their principal, as they objected to the DSS move.

But he is now undergoing interrogation at the DSS Headquarters In Aso Drive.

This is happening barely two weeks after the Attorney-General of the Federation, Abubakar Malami (SAN) reportedly complained to the President, Major General Muhammadu Buhari (retd.) about Magu’s conduct and advised that he should be relieved of his appointment.

The AGF was said to have accused Magu of insubordination and discrepancies in the figures of funds recovered by the EFCC.

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Again CBN Debits Banks N118 Billion for Failing to Meet CRR Target

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CBN Debits Deposit Money Banks N118bn for Not Meeting CRR Target

The Central Bank of Nigeria (CBN) on Friday debited the nation’s deposit money banks a total sum of N118 billion for failing to meet 27.5 percent Cash Reserve Ratio (CRR) target.

This is the fourth of such action, bringing the total amount debited so far this year to N2.2 trillion.

According to Tunde Abidoye, an analyst at Lagos-based FBN Quest, the move brings “further downward pressure on banks liquidity ratios and earnings.”

“Based on the total sum that each bank has been debited this year, and our NIM assumptions for each bank, we estimate an aggregate opportunity cost of funds of N86bn for our universe of banks coverage,” Abidoye stated in a note to clients.

The central bank continues to debit banks to force them to loan more into the real sector and also reduce their forex purchasing power to better manage the nation’s weak foreign reserves and curb capital outflow. A series of recent reports have pointed to a possible foreign exchange devaluation to ease pressure on the nation’s reserves.

The report shows that the Stanbic IBTC and Guaranty Trust Bank were debited N15 billion each.

Details later…

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Debt Market: Dangote Cement Raises N250 Billion in H1, 2020

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Dangote Cement Raises N250 Billion From Debt Market in H1 2020

Dangote Cement raised a total sum of N250 billion from the nation’s debt market in the first half of the year, according to the FMDQ Securities Exchange Limited.

In the statement published on the FMDQ website, the N250 billion debt includes the N100 billion Series 1 Bond raised under Dangote Cement’s N300 billion Bond Programme and the N150 billion Commercial Paper (Series 13-16 Domestic CP Issuance Programme) offered earlier in the year and now listed and quoted on FMDQ Securities.

Mr Michel Puchercos, the Chief Executive Officer, Dangote Cement, was quoted as saying, “This landmark transaction is the largest-ever bond issuance by a corporate issuer in Nigeria.

“It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme.

“The success of these transactions, in the current challenging environment, illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile.”

Mr Kobby Bentsi-Enchill, the Executive Director and Head of Debt Capital Markets, Stanbic IBTC Capital Limited, said, “Stanbic IBTC Capital Limited has a long history of partnering with Dangote Cement Plc, and are delighted to have advised on this landmark corporate bond issuance, which reflects the depth and diversity of the Nigerian debt capital markets.”

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