The Market Today - 9 June 2017
Nigeria set to issue first diaspora bond
According to the Debt Management Office, the Federal Government has commenced a global offering of its first Diaspora bond reported to be $300 million. Nigeria has filed a registration statement with the U.S. Securities and Exchange Commission and an application will be made to the U.K. listing authority and the London stock exchange to allow the bond be admitted to trading on the LSE once issued. A roadshow for the dollar denominated bond is expected to commence on 13 June. We highlight that the 2017 budget projects a planned external borrowing of ₦1.067 trillion ($3.5 billion) and the diaspora bond is a complementary approach to likely Eurobond offerings to meet the external borrowing target. We consider this is a welcome development as it diversifies Nigeria’s external financing options while giving citizens in diaspora the opportunity to contribute to the growth of the economy. Also, given the recent improvement in the macro environment, we expect pricing to come in more favorable than recent issues.
Oil & Gas, Banking stocks drive ASI further
Bolstered by gains in several blue chips, as well as improving oil production outlook, the Nigerian equity market maintained its upward trend, climbing 77bps higher yesterday. We expect further gains in today’s session, riding on the strong market sentiment and buying interest.
Stock Watch: With the Force Majeure on Forcados exports now lifted, SEPLAT’s has been able to reinstate gross production to pre-Force Majeure levels, according to a statement from the company. The stock has gained 21% since the start of the week, returning to a 2017-high of ₦425.00.
Bond yields trend further south
The bond market turned bullish yesterday amidst offshore interest. However, amidst sustained liquidity pressure, the bills market bucked recent trend, trading mixed with a bearish bias. Whilst we expect further mixed trading in the bills space on account of liquidity pressures, we foresee yields moderating in the bond space on the back of notable offshore interest.
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