06 Jun

Daily Watch – Nigeria’s debt spirals, Zenith bond oversubscribed

  • The CBN has introduced new rules into the interbank foreign exchange market. The rules were contained in a new circular tagged, “Further liberalisation of the interbank foreign exchange market,’’ and signed by the Director, Financial Markets, Dr. Alvan Ikoku. Among other things, the regular said authorised dealers in the interbank were meant to put only ₦1 spread on their transactions.
  • Nigeria’s total indebtedness to foreign and local creditors now stands at ₦19.16 trillion. According to the DMO, this is a ₦1.8 trillion increase from the ₦17.36 trillion recorded at the end of December 2016. Segmenting the national debt, the DMO put the FG’s domestic debt at ₦11.97 trillion. In the same two-year period, the country’s external debt (for the federal and state governments) rose from $9.46 billion to $13.81 billion. According to the DMO, the official exchange rate of ₦306.35 to $1 was used in calculating the country’s external debt for March 31, 2017, while the official rate of ₦197 to $1 was used in determining the foreign debt for March 31, 2015.
  • Etisalat Nigeria says it is still in discussions with banks regarding existing multi-billion naira debt obligations under the syndicated loan agreement signed in 2013. The telco has not received any formal communication from the lenders regarding the proposal. Earlier, a consortium of commercial banks in Nigeria had sought to take over Etisalat Nigeria,on the grounds that the telecoms giant was unable to meet its financial obligations to the lenders to the tune of over ₦500 billion. The take over was halted by the NCC and the CBN.
  • Zenith Bank has issued a five-year senior unsecured benchmark bond of $500 million on the Irish Stock Exchange, which recorded oversubscription of more than 300 per cent. The issue is in addition to the existing $500 million which matures in April 2019. Subscription to the Eurobond 2022 issue was $2.1 billion and recorded landmark success on three counts: pricing, subscription level and global appeal. The bond was issued at par with both coupon rate and yield to maturity rate priced at 7.375 per cent. The 7.375 per cent pricing is 50 basis points better than the sovereign of 7.875 per cent. The rating of both the sovereign and Zenith Bank is B+ with the bond issue also rated B/B+.