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The Market Today - 14 July 2017

Lagos to issue ₦100 billion bond to finance infrastructure projects                                  

The Commissioner of Finance, Economic Planning and Budget, Lagos state, Hon. Akinyemi Ashade has expressed the state’s commitment to raise ₦100 billion in a bond offering to finance infrastructure projects. The commissioner stated that the bond, which would be issued under the state’s ₦500 billion debt issuance program, would be used to finance critical projects in the area of tourism, transportation and also giving facelifts to several districts in the state. Lagos, like many other states in Nigeria suffers a huge infrastructure deficit. The effects of this deficit have been evident more recently following heavy rains which have led to flooding, thereby causing traffic gridlocks and endangering lives and property. We therefore believe the tackling of this issue is an important project for the state and with Lagos having a steady revenue base – one of three states with IGR higher than Federal Allocation – we expect the bond issuance will be well received by investors.                             

Nigerian bourse extends winning streak                                              

Amidst continued improvement in market volumes (highest in ten sessions), the Nigerian bourse closed higher for the sixth consecutive session yesterday (NSE ASI up 80bps), with most key sectors closing in the green. Assessing yesterday’s intraday trading chart, we believe the consistent ASI uptrend through session partly signals continued improving market sentiment. We expect this to drive the market to another positive close today.          

Stock Watch: Following a 247bps positive close yesterday, ETI stretched its gaining streak to six in a row, climbing 13% in the process. The stock currently trades at ₦14.10 versus a year high of ₦15.35 and has returned 37% ytd.                                

CBN conducts OMO auction amidst OMO maturity                                          

Despite the liquidity boost, trading was mixed in the T-bills market with yields moving in opposite directions across the space. The bond space traded quite bearish with most yield upticks recorded on long dated bonds. We expect trading in the T-bills market to remain mixed today even with the CBN likely conducting another OMO.