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Breakfast Report - 12 April 2021

The Director-General of the Debt Management Office in Nigeria has recently made known its plans to select advisers for its next Eurobond issue. Since the pandemic, Sub-Saharan African (SSA) economies have been wary of tapping the international debt market, considering the spate of credit rating downgrades and debt defaults within the region. However, we had alluded in our Q1’21 SSA outlook that vaccine-induced commodity prices recovery could spur further SSA debt issuances in the international debt market. For example, just at the end of Q1, Ghana’s successful raise of $3bn from the international debt market revealed a renewed appetite for frontier issues. Thus, the potential Eurobond raise could support budget execution and improve external reserve accretion, as higher oil prices whet investors’ appetite. However, we expect debt sustainability indicators and the new medium-term debt management strategy to guide budgetary funding.

Equity: We anticipate a tepid start to this week’s trading amid persistently mild investor sentiment, weak volumes and interest in the Fixed Income market. Furthermore, following the little gains observed at the end of this week, profit taking activity remains a strong possibility.

Stock Watch: SOVRENINS ended the Friday as the second-largest gainer, rising 8.70% to close at ₦0.25. The Insurance counter is up 25.00% YTD, outperforming the subsector which has gained 6.53% YTD.

Fixed Income: We expect the market to open the week in a similar pattern, as investors continue to take positions across the bonds space in anticipation of April’s upcoming auctions. Meanwhile, we expect interest in the T-bills segment of the market to remain mixed in the next session, as investors continue to monitor developments around the coronavirus vaccine and the health of the local economy.