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Breakfast Report - 14 June 2022

The Week Ahead
According to the Debt Management Office, Nigeria's debt stock increased by 5.1% q/q to ₦41.6 trillion in Q1'22. The slight uptick was driven majorly by a net-accumulation of ₦1.3 trillion from domestic sources and the $1.25 billion Eurobond issuance in March. As a result of this uptick, Nigeria’s Debt-to-GDP ratio has increased to 24% from 23% although still below the 40% medium-term threshold of the DMO. Whilst the debt-to-GDP ratio is quite modest, external debt stock continues to rise amid falling crude receipts and a weaker Naira. However, the debt-mix showed that Nigeria has still has more outstanding domestic debt (60% of debt stock) than external (40% of debt stock). Overall, the pace of external borrowings could ease as tighter financing conditions could prevent Nigeria from raising $990 million in the international debt market. Thus, we expect more focus on domestic borrowings in the near term, as the Government moves to fund its amended budget.
Equity: Despite last Friday’s positive close, market sentiment remained slightly bearish as the session ended with more losers than gainers (18 to 14). Although we anticipate recoveries in some of the stocks with beaten down prices, we do not rule out sell-offs in specific counters this week.
Fixed Income: In the absence of significant market catalysts, we anticipate further bearish trading in the bonds market this week. Meanwhile, the NTB and OMO spaces are expected to trade quietly, as attention shifts to the T-Bills PMA, where the FG is expected to offer ₦38.9 billion across the three tenors