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Breakfast Report - 15 November 2021

• Recently, the Senate approved the presidential loan request to the tune of $16 billion, €1 billion, and $125 million. With this loan and pending Sukuk issuances, our debt-to-GDP could hit medium-term targets of 40% within a short time span and our debt sustainability ratios could deteriorate at a faster pace. While our debt-to-GDP sits below peer average of 55%, Nigeria’s debt service-to-revenue remains above its peers at 98% amid huge exposure to hydrocarbons and weak revenue mobilization drive. On a positive note, however, funds tailored towards infrastructure could be critical for long term development. In the medium term, the government needs to mobilize and diversify revenue sources to prevent the nation from slipping off a fiscal cliff, especially as the world makes a gradual shift from oil.

 

• Equity: The market traded mixed last week. However, in comparison to the prior week, turnover improved by 69% due to increased activity in some of the large/mid cap names like MTNN, AIRTEL and FLOURMILL, with overall sentiment still largely bearish. We anticipate this tepid sentiment to persist as there are no major catalysts to spur activity.

 

• Fixed Income: In the coming session, we expect current healthy liquidity levels to support activity in the NTB and OMO segments, while we foresee a tepid session in the bonds market, as players anticipate the bond auction scheduled for Wednesday.