The Market Today - 29 November 2018
Access Bank to redeem $400 million 2021 Eurobond in 2019
Access Bank plans to redeem its 2021 $400 million Eurobond two years early according to Seyi Kumapayi, the Chief Financial Officer (CFO) of the bank. Coming a day after Fitch affirmed a B’ rating on the bank’s long-term debt with a stable outlook, the bank revealed it would redeem the 9.25% ACCESS JUN 2021 bond to reduce financing costs. This trails a steady uptick in the yield on the bond—from 9.93% in August to 10.23% yesterday, a trend consistent with other sovereign and corporate Eurobonds in Nigeria. According to the CFO, the bank will explore other sources of capital in order to keep its capital adequacy ratio well above 20% and may consider retaining more of its profits as capital rather than distributing the cash as dividends.
Bears persist as key sectors continue to shed points
"With three of four key sectors moderating d/d, the Nigerian equity market shed points (ASI: -48bps d/d) for the third straight day. Furthermore, investor sentiment remained weak and market activity was unremarkable. Whilst the market approaches a 19% YTD loss, the ASI does not seem to have found a floor, as investor apathy and persistent sell-offs of already beaten-down stocks continue to drive markets lower. We foresee another bearish trading session today, with little confidence of a bargain-hunting boost
Stock Watch: UBA has shed 6% of its value in the last four sessions to settle at ₦7.35, 47% below our target price of ₦13.78. The stock is trading at a YTD loss of 28%, underperforming the Banking sector (-16%).
One-year T-bill crosses 17% after bearish T-bill trading
Whilst trading was not positive in the T-bills space yesterday, we expect a resurgence of demand as investors who missed out at the PMA (81% oversubscription) scramble to pick up the bills from the secondary market. Also, supported by an OMO maturity of ₦128 billion due today, we see yields moderating across the T-bills space as they adjust towards PMA rates, barring further action from the CBN. Meanwhile, we foresee further yield declines in the bond space, as investors continue to favor the longer end of the curve.
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