23 Feb

Daily Watch – Aso Rock really loves Eurobonds, Paga widens global footprint

  • Nigeria’s acting president has written to parliament to seek approval for a new $500 million Eurobond sale, a statement said on Wednesday, to help make up for a shortfall in the government’s budget. The new issue would follow the government’s sale of $1 billion worth of 15-year bonds earlier this month. “Following the high oversubscription of the recent $1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond Debt Instrument of $500 million to fund the implementation of the 2016 budget,” Acting President Yemi Osinbajo said in a letter to the National Assembly, according to Wednesday’s statement. The government has laid out plans to spend a record ₦6.86 trillion ($22.5 billion) to boost the economy in a draft 2017 budget sent to parliament for approval. It planned to spend ₦6.06 trillion last year but struggled to fund it. External borrowings for the budget currently consist of $600 million from the African Development Bank and $1 billion from existing Eurobonds. The country is seeking at least a $1 billion loan from the World Bank and a $1.3 billion loan from China to fund railway projects. Nigeria will also present a reform proposal to the African Development Bank to win the release of a second loan tranche worth $400 million, officials have said.
  • The naira recorded further gains against the United States dollar on the parallel market on Wednesday, reversing part of the loss it had recorded in recent days. Specifically, the naira rose to ₦505/dollar on Wednesday, up from ₦512/dollar on Tuesday, as the Central Bank of Nigeria started increasing dollar supply on the official market. The CBN had on Monday introduced a new forex policy action aimed at boost forex supply to enable commercial banks to meet the needs of customers seeking dollar to pay school fees and medical bills overseas, as well as for personal travel allowances. The CBN will begin weekly sales of $1 million to each of the country’s 21 commercial banks at ₦375/dollar to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates. The decision was announced hours after the naira tumbled to ₦520/dollar on the parallel market on Monday as scarcity of the greenback continued to weigh on the exchange rates. The naira had closed at ₦516/dollar last Friday, after hitting ₦510/dollar and ₦507/dollar last Thursday and Tuesday, respectively.
  • The value of pension assets invested in the Nigerian equities market rose to ₦481.8 billion at the end of November 2016, up from ₦445.88 billion in January of the same year. Total assets under management by Nigerian pension operators stood at ₦6.02 trillion as at the end of November, according to the National Pension Commission (PenCom). An analysis of the figures showed that ₦481.8 billion are in equities, 8.02 percent of the total value; while PFAs are allowed by law to invest about 25 percent of their pension assets in equities, the level is about eight percent. In chasing stable and guaranteed returns, PFAs have shown a clear preference for government securities, investing about 71 percent of their assets in bonds and treasury bills at the end of November 2016. The federal government bonds attract the highest investment of ₦3.536 trillion or 58.7 percent, while treasury bills attracted ₦749 billion of pension assets.
  • Nigeria’s 75 million people rank second only to India’s 263 million persons on the list of countries with the highest electricity access deficit. According to a new World Bank report, other countries on the list of nations with highest electricity access deficit are Ethiopia with 67 million; Bangladesh 62 million; Congo Democratic Republic with 55 million; Tanzania with 40 million; Kenya with 33 million; Uganda with 30 million; Sudan with 25 million; and Myanmar with 25 million people. According to the report, an energy scorecard released on Monday, Ethiopia, Nigeria and Sudan alone have 116 million people living without adequate electricity. The authors noted that energy access, efficiency and renewables are on the rise in many developing nations, but in places like sub-Saharan Africa, the energy situation is still grim and hundreds of millions remain unconnected. The report found that 80 percent of the 111 countries studied have policies for more sustainable energy — meaning energy efficiency, access to energy and use of renewables — with 45 countries at advanced stages of policy-making. According to the report, access is in part, a financial issue in these countries. In many sub-Saharan Africa countries, people pay more than $500 to connect to the grid, while in another developing country, Bangladesh, the cost is as little as $22.
  • Paga, a payment and financial services company, on Tuesday, announced that it has gone into partnership with MoneyTrans, a leading Money Transfer company and TerraPay to launch cross-border remittances from Spain to mobile wallets in Nigeria. Paga in a statement said Nigerians in Spain can now send money to any mobile phone number in Nigeria through its platform, by visiting the nearest MoneyTrans store. “The recipient can withdraw money from more than 11,000 Paga agents across Nigeria or make a cardless withdrawal from ATMs. The recipient can also use the money to pay bills, buy airtime or send the money to any other phone number or bank account in Nigeria, among other services, “it stated. The company added that the mobile based cross-border remittance service has been launched in Spain and will be followed by successive launches in Belgium, France and Italy in the coming weeks. Nigeria is ranked sixth among the top remittance-receiving countries in the world. In 2015, the World Bank pegged remittances received in Nigeria at $21 billion.