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Exchange rate gains tied to $1.3bn maturing NDFs, CBN’s interventions



The naira has experienced consecutive double-digit appreciation on the official market, and sources say that the Central Bank of Nigeria (CBN) has been selling more dollars on the official market in anticipation of a $1.3 billion non-deliverable forward (NDF) maturing today Wednesday, May 29, 2024.

On Monday, the exchange rate between the naira and the dollar saw a significant appreciation of 10.71 percent, closing the day at N1,339.33/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window.

This appreciation marked the highest closing rate since April 26, when the exchange rate was N1,339.23/$1, based on data from FMDQ. It was also the biggest currency appreciation rate in two months since May 20 when it recorded a rate of 12.84 percent.

However, the foreign exchange (FX) turnover decreased sharply by 67.50 percent, amounting to $180.8 million on Monday.

By Tuesday, there was a significant surge in FX turnover, which increased by 81.59 percent to $328.32 million as the apex bank sold more forex on the market.

The naira also surged to N1,1173.88/$1 on the NAFEM window, marking an increase of 14.09 percent from the previous day’s rate. This is the highest one-day increase since January 2024.

According to sources with knowledge of the matter who spoke with newsmen, the Central Bank of Nigeria (CBN) has reverted to its previous strategy of selling foreign currency below the market rate. This move is aimed at artificially lowering the exchange rate.

The sources, fearing victimisation, requested to remain anonymous.

The push for a significant appreciation was tied to the maturing $1.3 billion NDF today as the CBN “needs to lower the reference rate to reduce payout.”

According to data from the FMDQ, the $1.3 billion NDF makes up about 82 percent of the total NDFs open contracts ($1.58 billion) as of May 24, 2024.

The sources added that the CBN will likely “manage” the rate a lot lower today, Wednesday, May 29, as a way to celebrate the one-year anniversary of the president of Nigeria, Bola Tinubu.

Confirming what sources told us, the Chairman of Skymark Partners Limited, Egie Akpata, “What contributed to the appreciation was the significant amount of central bank’s dollar sales on Monday and Tuesday.”

He noted that if the central bank continues the sale of dollars as they did on Monday and Tuesday, there is a possibility of maintaining the naira appreciation.

Providing further specifics on the interventions, a Private Wealth Advisor for a Lagos firm, Damilola Alonge, told Nairametrics that said, “The apex bank intervened at the NAFEM twice yesterday. The first round of intervention was about $3 million and the second round at $2 million.”

He added that successful bids were within N1,260 and N1,320 for the first intervention on Tuesday, while the second intervention was between N1,160 and N1,250.

On Monday, he disclosed that CBN intervened in two tranches with $2 million sold. The interventions were around the rates of N1,380 and N1,400 while the second intervention was around N1,310 and N1,370.

The total intervention size on Monday was estimated to be around $80 million on Monday and $97 million.

However, our sources said that the total intervention was around $200 million.

Alonge added that this intervention is yet to have much impact in the parallel market, where the naira still sold for about N1,400. yesterday.

Recall that the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, said that the bank has no intention to defend the naira.

He stressed that there were no future intentions to defend the currency with the external reserves, as it was counterintuitive since the apex bank was already implementing a willing buyer, willing seller policy.

However, although it seems the apex bank has paused selling foreign exchange to Bureau de Change (BDC) operators, it appears that it is yet to step down from intervening in the official market to defend the naira.

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Money market

Naira depreciates by 0.17% against dollar at official market



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.

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Money market

GTCO issues Notice of Proposed Offering



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”.

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Money market

NDIC lists Heritage Bank’s head office, other assets for sale



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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