Money market
DMO raises N4.9trn for Ways and Means, says domestic market major source of funding for FG
The Debt Management Office (DMO) has, again, sought the support of primary dealer market makers (PDMM) to raise more financing for Nigeria’s domestic debt plan.
The DMO has an outstanding N1.5 trillion to raise from the Federal Government’s proposed N6 trillion bond having already raked in N4.5 trillion from previous issuances.
The director-general of the Debt Management Office (DMO), Patience Oniha, who led a team from the debt office for a meeting with the primary dealer market makers in Lagos on Monday, noted that the DMO had raised part of the finance for both the domestic debt and ways and means borrowing, which they intended to complete.
“We had a meeting earlier in the year where we talked about the DMO’s borrowing plan, which is the FGN’s borrowing plan, and we told you what we were doing from the budget because that’s the principal document for refinancing.
“Then, we discussed the Ways and Means borrowing and how to put that in order. At that time, the budget had N6 trillion of domestic borrowing, new borrowing, not refinancing. And then the ways and means at that time, there was N7.3 trillion that the National Assembly approved for securitisation,” she said.
“We’re happy that with your support for the new domestic borrowing in the 2024 budget, which was N6 trillion, we raised N4.5 trillion. So it’s not our money, you gave us money and we’d like to thank you.”
“For the ways and means, out of that N7.3 trillion that the National Assembly approved for securitisation, we have raised N4.905 trillion. So, there’s still a balance in both cases, but let’s see how the rest of the year goes,” Oniha stated.
At the April bond auction, the DMO offered N450 billion across three bonds: the April 2029 bond (Reopening, 5-year), the February 2031 bond (Reopening, 7-year), and the May 2033 bond (New, 9-year reopening).
“Although subscriptions totalled N551.33 billion, this was relatively low compared to previous months but still 22.52 percent higher than the offer. The subscription distribution was N100.57 billion for the 2029 bond, N76.88 billion for the 2031 bond, and N373.88 billion for the 2033 bond.
“Ultimately, the DMO sold N380.77 billion, 15.38 percent less than the total subscriptions. The stop rates decreased to 19.29 percent, 19.74 percent, and 19.89 percen, compared to 19.30 percent, 19.75 percent, and 20 percent in the previous auction,” Futureview Research analysts said in their May 20 note to investors.
Also at the meeting, Nadia Zakari, president of Financial Market Dealers Association, stated that their interactions with the DMO have been critical in making decisions that shape the country in the long term.
“As market operators, we act as financial intermediaries who interact with other market operators, investors, and their clients. I think it’s because of the size and importance of these interactive sections, that our business environment is ever-evolving, and constantly changing.
“These constant engagements are crucial as some of the interactions we’ve had as highlighted by the director-general have been critical in making decisions as we strategically plan for the rest of the year,” she stated.
United Capital research analysts said in their May 20 note, “This week, we expect mixed interest in FGN Bonds. The overall direction of the market will be dependent on the outcome of the MPC meeting.”
The Naira on Thursday slightly depreciated at the official market trading at N1,476.24 to the dollar.
Data from the official trading platform of the FMDQ Exchange, revealed that the Naira lost N2.58.
This represents a 0.17 percent loss when compared to the previous trading date on Tuesday when it traded at N1,473.66 to the dollar.
Also, the volume of currency traded reduced to $92.68 million on Thursday down from $385.91 million recorded on Tuesday.
Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between 1,500 and N1,400 against the dollar.
By Seun Ibiyemi
Guaranty Trust Holding Company Plc (GTCO PLC) has filed a preliminary “red herring” prospectus (Red Herring Prospectus) with the Securities and Exchange Commission (SEC) in connection with a proposed offering for subscription of ordinary shares of 50 kobo each in its share capital (the Ordinary Shares) to raise gross proceeds of up to N500 Billion (the Proposed Offering).
The number of Ordinary Shares to be offered and the price range for the Proposed Offering have not yet been determined.
According to the notice cited, the notice is issued in reliance on Rule 283 of the Rules & Regulations of the Securities & Exchange Commission, Nigeria. The notice read in part, “This notice does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offer, solicitation or offer to buy, or any sale of securities will be made only by a prospectus duly registered by the Securities and Exchange Commission, Nigeria (SEC) in accordance with the provisions of the Investments and Securities Act, No. 29, 2007 (the Act) and the rules and regulations of the SEC made pursuant to the Act (the SEC Rules).
Stating the purpose of the proposed offering, the notice further read that, “The net proceeds of the Proposed Offering will be used for (i) the growth and expansion of the GTCOPLC Group’s businesses. Such planned growth and expansion will be effected through investments in technology infrastructure to fortify existing operations, the establishment of new subsidiaries and selective acquisitions of non-banking businesses; and (ii) the recapitalisation of Guaranty Trust Bank Limited”.
Identifying the target investors, the notice read that, “The Proposed Offering is structured as an institutional offering targeted at eligible investors and a retail offering within Nigeria (the Nigerian Tranche) and a private placing to persons reasonably believed to be qualified institutional buyers outside Nigeria (the International Tranche)”. The Proposed Offering is anticipated to open by July, 2024.
The filing of the Red Herring Prospectus was undertaken with a concurrent filing of a preliminary universal shelf registration statement. The universal shelf registration will permit GTCOPLC to establish a multi-currency securities issuance programme (the Programme) to issue various types of securities, or any combination of such securities, in one or more offerings, from time to time, to raise proceeds in an aggregate amount of up to U.S.$750 million (or equivalent amount in Nigerian Naira) in the Nigerian/international capital markets during the validity period of the Programme.
The Proposed Offering is expected to be the first issuance under the Programme.
For a caveat, the notice read that, “This notice does not constitute an offer of securities for sale in the United States or to U.S. persons (“U.S. persons”), as such term is defined in Regulation S promulgated under the United States Securities Act of 1933, as amended, (the U.S. Securities Act). The Ordinary Shares being offered have not been, nor will be, registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from such registration requirements”.
The Nigeria Deposit Insurance Corporation has listed the head office in Lagos and branches of failed Heritage Bank across the country for sale in its role as liquidator of the bank.
NDIC announced the sale of the bank properties numbering 48 and its chattel including vehicles, office equipment, plant, and machinery in another 62 locations across the country in an advertorial published on Thursday.
“The Nigeria Deposit Insurance Corporation in the exercise of its right as Liquidator of failed Deposit Money Banks hereby invites interested members of the general public to buy the assets (landed property and chattels) of defunct Heritage Banks through public competitive bidding,” part of the advertorial read.
The head office of the bank and its annex located at 143 Ahmadu Bello Way and 130 Ahmadu Bello Way, Victoria Island, Lagos was listed for sale (buildings, chattels, generator, and motor vehicle). Also listed for sale were six other branches in Lagos, four branches in Abuja, four in Rivers States, and the others spread across the country.
Interested parties are invited to come for an inspection and subsequently put in bids on the assets to be submitted to the NDIC office in Lagos.
Bids are expected to come in with 10 percent of the bid amount in Certified Bank Draft. Successful bidders will be required to pay the balance of the bid price within two weeks of notification.
Earlier, the corporation announced the commencement of the verification and payment of the depositors of the bank with N5m or less in their accounts. This category of customers makes up about 99 per cent of the bank customers.
The Managing Director of the NDIC, Bello Hassan, at a media briefing on the liquidation of Heritage Bank in Abuja last Wednesday, put the total depositors at Heritage Bank at 2.3 million.
Hassan noted that the total bank deposits at Heritage Bank stood at N650 billion while its loan portfolio was about N700 billion.
In announcing the revocation of the licence of Heritage Bank, the apex bank in a statement signed by the Acting Director of Corporate Communication, Sidi Ali, said, “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The board and management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.
“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline. Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby, making the revocation of the licence the next necessary step.”
Stakeholders in the sector have gone on to express confidence in the decision of the CBN in the overall interest of the sector.
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