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Breakfast Report - 15 April, 2019

The Week Ahead                                                       

Seplat Petroleum Development Company and the Nigerian National Petroleum Corporation (NNPC) are set to raise $700 million for a joint gas project which is scheduled to begin production by the end of 2020. This aligns with the federal government’s plans to reduce the country’s reliance on oil for revenue and optimize power generation. The project, known as Assa North-Ohaji South (ANOH), is one of seven such projects aimed at boosting gas production infrastructure and will be located in Imo State. ANOH Gas Processing Company, a wholly owned subsidiary of Seplat and Nigerian Gas Company of the NNPC, will provide 60% of the funds as equity, while the balance will be sourced as debt by the private company. The plant, which will process gas from the unitized upstream fields at OML 53 and OML 21, has an initial capacity of 300 million standard cubic feet per day and is scheduled to begin production by Q4’20, with first supply targeted at 2021.                                                       

Equity: The Nigerian bourse continued on its path to recovery in its third consecutive session of gains on Friday, as the ASI rose 74bps (-17bps w/w). We foresee the index gaining at the beginning of this week in the absence of unforeseen events. We also expect market activity to remain low to average as market players remain cautious.                                                      

Stock Watch: Despite a mark down in the stock price of ACCESS bank due to FY'18 dividend payments (₦0.25; ₦0.50 final dividend), there were substantial bids and the stock almost covered the ground lost on account of the dividend payment. The security settled at ₦5.95, gaining 348bps after the mark down, bringing YTD declines to 13%.                                                  

Fixed Income: We expect sustained demand in the T-bills market this week, as the CBN continues to starve the market of OMO auctions. Similarly, we expect that buy sentiment in the bond space will persist as investors continue to take advantage of attractive yields in the secondary market.