Breakfast Report - 27 April 2020
On Thursday, the International Monetary Fund (IMF) announced that it would decide this week on Nigeria’s $3.4 billion aid request, as the Nation’s seeks $6.9 billion in loans from multilateral lending organizations to help it combat the impact of the COVID-19 outbreak. On April 7, 2020, Nigeria had submitted the request through the Fund’s Rapid Financial Instrument (RFI) protocol. The RFI provides rapid assistance to all IMF members, facing an urgent balance of payment need and is a short-term facility that typically bears interest. With a downturn in oil prices, coupled with the lockdown restricting business activity and as a result, weighing on tax receipts, the approval of the request by the IMF board should enable Nigeria to provide funds for critical healthcare expenditure. With both the IMF and World Bank slated to decide on the nation’s loan request, an approval with boost the nation’s foreign exchange reserves, while supporting a defense of the Naira to a certain extent.
Equity: With the continued threat of the Coronavirus pandemic as well as the declining crude oil price to the macro-economic outlook, we expect the equities market to remain pressured in the short term, though current price levels remain good for mid/long term investors. Therefore, expect a similar trading pattern this week, with some sessions filled with bargain hunting and sell-offs in others.
Stock Watch: MTNN closed among the top gainers for Friday, advancing 400bps to close last week at ₦104.00. Since falling to its year low price of ₦90 three weeks ago, the counter has enjoyed positive patronage, gaining a little above 15.00% within the same period.
Fixed Income: We expect participation in the secondary space to remain focused at the short-to-mid end of the curve, as the country manages the fallout from oil demand due to the downturn in global productivity. As such, we foresee further yield moderations in the OMO and Bond markets, while the NTB space should continue to experience muted activity.
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