SEC optimistic companies may raise over ₦200bn instruments

The Securities Exchange Commission (SEC) has expressed optimism that Nigerian corporates may raise as much as ₦200 billion from the sale of debt instruments in 2018.

This it noted would be the highest ever in the country’s history if the expecteations are net
According to SEC, five companies have already submitted proposals for debt sales totaling N60.5 billion, stressing that improved liquidity on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange was beginning to encourage firms to sell more debt securities.

Data made available by the Commission shows that companies raised ₦23 billion in 2017 and ₦103 billion in 2016.

The 2017 figure is largely owed to the large issuances by the Federal Government although some states also issued some debt instruments.

The Federal Government issued its largest serving ever of the Eurobond in 2017; it also issued the Sukuk, green bond and savings bonds.

These funds were earmarked for infrastructural projects and funding budget deficit.
Commenting on the intentions of companies, Abubakar Jimoh, chief executive officer at Coronation Merchant Bank, said bank loans may not be enough to “substantially” finance businesses.

“Owing to the recent strong liquidity in the market, largely driven by the reduction in domestic borrowing and the consequent downward trend in rates, we expect to see an increase in corporate bond issuance in 2018,” he told Bloomberg in an interview.

He said the bank is planning to issue the first tranche of a N100 billion debt program in 2018 adding that at least four of his peers are going to take similar steps to increase their lending capacity.
Meanwhile, Brent sweet crude climbed to fresh highs on Monday, buoyed by a deepening economic crisis in Venezuela which threatened the country’s already tumbling oil supply.

United States oil prices rose above 70 dollars a barrel for the first time since November 2014.
The concerns added to worries over a looming decision on whether the U S will walk away from a neclear deal with Iran.

Instead, it will re-impose sanctions on Tehran, keeping international oil markets on edge.
This was China’s Shanghai crude oil futures, launched in March, broke their dollar-converted record high of 71.32 dollars per barrel by rising as far as 72.54 dollars on Monday.

Analysts warned that the deepening economic crisis in major oil exporter, Venezuela, threatened to further crimp its production and exports.

Venezuela’s oil output has halved since the early 2000s to just 1.5 million barrels per day (bpd), as the South American country has failed to invest enough to maintain its petroleum industry.
Beyond its challenges, Greg McKenna, Chief Market Strategist, at futures brokerage AxiTrader, said “the big story this week is going to be about oil and the Iran Nuclear deal’’.

Most market participants expect Trump to withdraw from the pact, he said.
Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran’s nuclear programme.

Expressing doubts over Iran’s sincerity, Mr Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12.

This situation would likely result in a reduction of Iran’s oil exports.

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