The Market Today - 15 December 2017
Nigeria to issue debut Green Bond
The Debt Management Office (DMO) has confirmed that it will issue a ₦10.69 billion Green Bond this month following a roadshow in Abuja and Lagos on the 14th and 15th of December 2017. The Green Bond issue is in line with Nigeria’s efforts to diversify its debt away from plain vanilla bond instruments, and also trails Nigeria’s endorsement of the Pair Agreement on Climate Change in September 2016. The bond will be used to finance “green” projects in the 2017 Budget, including the Renewables Energy Micro Utilities project and Afforestation Programmes. We note that this sale would make Nigeria the pioneer African issuer of Green Bonds and mark an impressive year for the Debt Management Office following successful issues of Eurobonds and Diaspora Bonds, as well as the launch of the Retail Savings Bond.
Bears strengthen their grip on Nigerian Equity Market
Investors’ sentiment remained tepid yesterday as the Nigerian stock market lost 156bps. Given the widening negative market breath and heightened sell pressure on stocks at the close of the previous session, we foresee another bearish session today.
Stock Watch: WAPCO has lost 12% over the last six sessions. The stock currently trades at ₦44.00, below Vetiva’s pre-rights target price of ₦69.60 and has returned 7.45% Ytd. We note that the cement company’s rights issue closes today.
Buoyant liquidity sees yields decline in fixed income market
Amidst T-bill maturities and in the continued absence of liquidity mop-ups, Interbank Call rate declined further – reaching a 2017-low of 1.42% (Previous: 2.50%). In the currency market, the naira depreciated ₦0.50 and ₦0.25 against the dollar at the parallel market and I&E FX window to settle at ₦362.00 and ₦360.41 respectively. Bulls retained their hold in the fixed income market yesterday as surging demand amidst the ₦202.2 billion maturity saw yields trend further southwards across the space. Supported by buoyant system liquidity and market expectation of lower interest rates in the near to medium term, we expect yields to keep heading south in the coming sessions.
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