21 Nov

Daily Watch – Commodities exchange catches privatisation fever, 10 banks suffer ratings revision

  • Fitch Ratings has revised down the Support Rating Floors (SRFs) of 10 Nigerian banks to ‘No Floor’ and downgraded nine banks’ Support Ratings (SRs) to ‘5’ following a reassessment of potential sovereign support for the banking sector. The Long-Term Issuer Default Ratings (IDRs) of First Bank, FBN Holdings, Diamond Bank, Fidelity Bank, FCMB, and Union Bank are downgraded to ‘B-’ from ‘B’, in line with their stand-alone creditworthiness as defined by their Viability Ratings (VR). The agency has affirmed the Long-Term IDRs of Zenith Bank, Guaranty Trust Bank, Access Bank, UBA, Wema Bank and the Bank of Industry. The downgrade of the nine banks’ SRs and the revision of 10 banks’ (including Wema) SRFs to ‘No Floor’ reflects Fitch’s view that senior creditors can no longer rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable.
  • MTN and Huawei have announced launch dates for Narrowband Internet of Things (NB-IoT) solutions in Nigeria and other African countries. The Low Power Wide Area technology will be launch in Nigeria and South Africa by the end of 2018. Alpheus Mangale, Chief Enterprise Business Officer at MTN South Africa, elaborated on the deployment strategy of NB-IoT, as the mobile operator and Huawei highlighted efficiencies that can result from utilisation of the technology, saying, “In Africa, around 60 million IoT devices are connected today. These connections are found across different industries including mining, financial services, automotive industry, connected homes and even government. The prediction by GSMA is that 450 million homes will be connected around the world by 2020. We conducted a number of pilot sites, along with Huawei, at our sites in Gauteng. We looked at smart metering, connected fridges … but our intention is to roll out this service in South Africa in 2017 where we can actually partner with utility companies in the country to look after the scarce resource of water by reducing leakages in the environment and that users don’t get overbilled. We also plan to do the deployment in Nigeria and Iran and then across all the other markets where we are present.” Launches in SA and Nigeria will be followed by Cameroon, Cote d’Ivoire, Ghana, Uganda and Zambia throughout 2019. Mangale says use cases will include wildlife tracking, logistics and farming.
  • Forte Oil has successfully raised a ₦9 billion bond under its ₦50 billion bond issuance programme. The funds raised will be used to refinance existing short-term commercial bank loan obligations and to finance the retail outlet expansion of the company. The company has an Issuer rating of A- long-term and A1- short-term rating by the Global Credit Rating Company (GCR). Speaking on the development, the Group CEO, Akin Akinfemiwa said, “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector is a testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”
  • The privatisation and recapitalisation of the Nigerian Commodities Exchange will be completed next year, according to a Punch report which quotes a senior member of President Buhari’s cabinet. The exchange was set up in 1999 as a stock exchange but got converted to a commodity exchange in 2001, and started trading in commodities in 2007. Its operations have, however, been hampered by limited funding until recently when the government came up with the privatisation plan. It was gathered from top government officials in Abuja that after three failed attempts at privatising the agency, the Federal Government had put in place adequate strategies to reposition the exchange. It is understood that the Nigerian Sovereign Investment Authority had been mandated by the FG to work with a strategic equity partner in this regard. According to Industry, Trade and Investment minister, Okechukwu Enelamah, “The whole idea is to create the kind of stabilisation and market intervention influence in commodities in the country so that when you have excess commodity, they can buy them off and when you need to supply to the market, you can create a market with that supply.” The Presidency said last week despite being Africa’s largest producer of grains, Nigeria faced the prospect of famine early next year following a huge demand in the global market targeting the country’s surplus production.