EUR 132.56 For Business Accounts Only

Breakfast Report - 26 September 2016

Updated statistics on Nigeria’s debt stock indicate that external debt at the end of the H1’16 stood at $11.2 billion, a 5% rise from the end of 2015, translating to a 51% increase in naira terms (as a result of 44% naira depreciation in the period). According to the Debt Management Office (DMO), the Federal Government (FG) and state governments account for 68% and 32% of the external debt respectively. With total domestic debt up 20% on the back of higher bond issuance (up 29%), total public debt (both FG and states) rose 29.3% in the six months up to June 30 and now stands at ₦16.3 trillion. Despite a significant increase in domestic debt in the last 6 months, the ratio of domestic to external debt still stands at 80/20 with currency depreciation inflating the value of external debt.

According to the NNPC Oil and Gas report for July, average daily crude oil & condensate production rose to 1.77 million barrels in June (May: 1.69 million barrels) following repairs. This puts average daily production for Q1’16 at 1.81 million barrels (Q1’16: 2.05 million barrels). In terms of power generation, gas supplied to gas-fired power plants and power generated from gas-fired power plants increased by 24% and 29% respectively in July, but these are still the second lowest values recorded this year. With only the Port Harcourt refinery running during the month, consolidated refinery utilization dropped to 6.74%, the lowest level since February. Whilst domestic production was down to 22 million liters in July (June: 120 million liters), NNPC reported no imports of DPK products for the second consecutive month. Finally, total LPFO sales by PPMC hit 15.6 million liters in July, the highest on record. Following all these, Group Revenue came in at ₦128.43 billion (June: ₦118.39 billion), whilst Group expenditure rose to ₦149.97 billion (June: ₦144.90 billion). With OPEC reference basket in July averaging $42.68 per bbl (June: $45.84 per barrel), total export receipts were $212.25 million (June: $219.26 million).

The Nigerian bourse traded mixed this past week. Ahead of the outcome of the MPC meeting, the ASI opened the week down 7bps, snapping a six-session winning streak. Following this, the market seesawed for the rest of the week as the MPC voted to maintain policy rates. Overall, the ASI posted w/w gains of 140bps with ytd loss further cut to 1.4%.

Notwithstanding the weekly positive return for the ASI (+140bps), we note that sector performances were mixed across board. We expect the mixed sentiment with a bullish bias to persist in the week ahead.