The total outstanding value of admitted Commercial Papers (CPs) on FMDQ Exchange increased in August 2023 by 8.50 per cent (N80.72 billion) to reach N1.029 trillion, according to the latest financial markets monthly report.
This is compared to N949.26 billion in July 2023, N831.94 billion in June, and N788.43 billion in May. The value of CPs quoted on the exchange in August was N239.04 billion, representing a month-on-month increase of 103.75 per cent (N121.72 billion) from July.
The report also revealed that CPs were issued by institutions from various sectors, including Financial Services, Manufacturing, Agriculture, Commodities Trading, Real Estate, Retail, Oil & Gas, and Transportation.
Additionally, corporate bonds worth N46 billion were listed on FMDQ Exchange in August, compared to no listings in July.
This resulted in a month-on-month increase of 0.07 per cent (N1.20 billion) in the total outstanding value for corporate bonds, which reached N1.795 trillion in the review month.
In terms of secondary market turnover, FMDQ Exchange saw a decrease of 11.24 per cent (N2.24 trillion) in August 2023 compared to July 2023. However, there was a year-on-year increase of 13.84 per cent (N2.15 trillion) compared to August 2022..
Foreign Exchange (FX), Money Market (MM) and CBN Bills transactions dominated secondary market activity, accounting for 80.99percent of the total secondary market turnover in August 2023.
Total spot market turnover for all products traded in the secondary market was N16.54trillion in August 2023, representing a MoM decrease of 10.45 per cent (N1.93trillion) from July 2023 figures.
The MoM decrease in total spot market turnover was jointly driven by a decline in turnover across all spot market products, with contributions by FX, MM and FI transactions decreasing MoM by 7.64per cent (N0.28trillion), 5.36per cent (N0.34trillion) and 15.56per cent (N1.31trillion), respectively.
According to the FMDQ report, the decline in MM turnover was majorly driven by a decrease in Repos/Buy-backs, offsetting the MoM improvement in Unsecured Placement/Takings transactions. Likewise, the downtrend in FI turnover was driven by a MoM decrease across all FI products, excluding CBN Special Bills which increased in the review period. Spot FX market turnover was $4.37billion (N3.34trillion) in August 2023, representing a MoM decrease of 6.13percent ($0.29billion) from the turnover recorded in July 2023 ($4.66billion).
In the FX Market, the US Dollar depreciated against the Naira, with the spot exchange rate ($/N) decreasing by 0.84percent ($/N6.46) to close at an average of $/N763.04 in August 2023 from $/N769.51 recorded in July 2023. Exchange rate volatility decreased in August 2023 as the Naira traded within an exchange rate range of $/N738.18 – $/N789.08 compared to $/N740.08 – $/N803.90 recorded in July 2023.
Fixed Income (FI) market turnover was N7.12trillion in August 2023, representing a MoM decrease of 15.54percent (N1.31trillion) from the turnover recorded in July 2023 (N8.43trillion).
The MoM decrease in the FI market turnover was driven by the 33.69per cent (N0.92trillion), 4.99per cent (N0.12trillion), 36.79per cent (N0.89trillion) and 36.09per cent (N0.01trillion) decline in turnover across T.Bills, OMO Bills, FGN Bonds and Other Bonds, offsetting the 85.08percent (N0.63trillion) MoM uptick in CBN Special Bills transactions, respectively. As a result, the trading intensity (TI) for T.Bills and FGN Bonds decreased MoM by 0.20 and 0.05 to 0.39 and 0.08, respectively.
T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 37.82per cent (N1.26trillion) and 30.83percent (N1.03trillion) of the secondary market turnover for sovereign FI securities in the spot market, respectively.
In August 2023, the yield spread between the 3M and 30Y sovereign FI securities increased by 1.42ppts to 10.63ppts, indicating a steepening of the sovereign yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in August 2023, declining further on the back of rising inflation which remains higher than policy interest rates and outpace increase in nominal yields.
The monthly financial markets report also shows that total turnover in the MM segment decreased MoM by 5.36percent (N0.34trillion) to N6.08triliion in August 2023. The MoM decline was driven by the 6.26percent (N0.40trillion) decrease in Repos/Buy-backs, offsetting the 46.08percent (N0.05trillion) uptick in Unsecured Placement/Takings transactions, respectively.
The average Overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) decreased MoM by 5.55 percentage points (ppts) and 5.38ppts respectively, to close at an average of 11.46percent and 10.77percent in August 2023.
Total turnover in the FX derivatives market segment was $1.49billion (N1.14trillion) in August 2023, representing a MoM decrease of 57.76percent ($0.79billion) from July 2023 figures. The MoM decrease in the FX derivatives turnover was jointly driven by the 13.38percent ($0.21billion) and 62.05percent ($0.17billion) decline in transactions across FX Swaps and FX Forwards, and the sustained lack of activities in the FX Futures market, respectively.
The report shows that in the OTC FX Futures market, the near month contract (NGUS AUG 30, 2023) expired and open positions with a total notional value (NV) of $0.71billion were settled. A far month (60M) contract, NGUS AUG 30, 2028 was introduced at a Futures price of $/N1,567.49, representing the same Futures price when the previous far month contract (NGUS JUL 28, 2028) was introduced in July 2023.
FMDQ Exchange records 6.75% MoM decrease in secondary market turnover
By Sodiq Adelakun
In October, FMDQ Exchange reported a total secondary market turnover of N21.70 trillion, a decrease of 6.75 percent (N1.57 trillion) from the previous month and an increase of 60.27 percent (N8.16 trillion) from the same period last year.
The Spot and Derivatives Market contributed N20.48 trillion and N1.22 trillion respectively to the total turnover.
The Spot FX Market turnover was $4.66 billion (N3.66 trillion), a decrease of 14.96 percent ($0.82 billion) from September 2023.
Further, the US Dollar appreciated against the Naira in the FX market, with the exchange rate ($/N) increasing by 5.34percent ($/N40.41) to close at an average of $/N797.43 in October 2023 from $/N757.02 recorded in September 2023, trading within a range of $/N741.85 – $/N993.82.
Similarly, in the Derivatives Market, total turnover in the FX Market segment was $1.55billion (N1.22trillion), representing a MoM decrease of 39.27percent ($1billion) from September 2023 figures.
Naira’s floating exchange rate brings uncertainty for investment banking in Nigeria — Ex-AIHN president
The former President of the Association of Issuing Houses of Nigeria, Ike Chioke, has stated that the currency reforms implemented by the Central Bank of Nigeria have brought about both challenges and opportunities for the investment banking industry.
Chioke made this statement at the Investment Banking Awards Night held in Lagos.
He further mentioned that the floating exchange rate of the naira and the elimination of fuel subsidies have had a significant impact on various sectors of the economy.
“Nigeria is bracing up to the impacts of the new government and they are already making changes to what I will call non-unorthodox policies. These policies had also introduced pain and hardship with the free-floating of the naira and removal of fuel subsidy forcing their weaknesses on various sectors of the economy,” he said.
Chioke added that despite the hiccups in the implementation of these reforms, they have thrown up major opportunities for investment banking.
He urged members to apply their best skills and expertise to make the best of the opportunities.
“As you know, the investment banking industry is a critical one for the Nigerian economy and we represent the best brains and the best expertise in that space,” he said.
Meanwhile, in the Debt Capital Market Category of the award, Chapel Hill Denham Advisory Limited won the Private Company Bond House 2022 Award; Best Commercial Paper House 2022 Award, and Best Bond House 2022 Award while the Best Commercial Paper House 2022 Award went to StanbicIBTC Capital Limited.
In the Equity Capital Markets Category, the Equity Deal of 2022 Award was won by three companies- namely Stanbic IBTC Capital Limited, UCML Capital, and Rand Merchant Bank.
SMEs contribute 46.31% to Nigeria’s GDP — SMEDAN CEO
The Director General/CEO of SMEDAN, Charles Odili, has highlighted the significant contributions of small and medium enterprises (SMEs) to the Nigerian economy.
According to Odili, SMEs make up 46.31 percent of the national GDP and contribute 6.21 percent to exports. These findings were revealed in the recent nMaSMEs survey, which estimated that there are approximately 39.6 million nMSMEs in Nigeria, employing 62.5 million individuals.
This accounts for a substantial 80.2 percent of the country’s labor force. In another development, 50 rural enterprises in Gombe State are participating in a three-day training program organized by SMEDAN and the Gombe State government.
Speaking at the opening ceremony of the training, in Gombe on Wednesday, the Director General and Chief Executive of SMEDAN, Charles Odili said that the programme was designed to provide an end-to-end business development service to the rural entrepreneurs.
Charlie Odili, who was represented by the Ag. Director of Partnership and Coordination, Prof Adeyinka Fusha, also said that the training was targeted at business owners who were at the bottom of the pyramids as a supportive mechanism to enhance rural entrepreneurship, competitiveness, job creation and financial inclusion.
According to him, “As you may be aware, the Nano, Micro, Small, and Medium Enterprises (nMaSMEs) sub-sector has played an important role in contributing to the economic development of many countries around the world.
“The sub sector accounts for the majority of the enterprises in Nigeria and also accounts for the highest number of jobs created in Nigeria’s economy.”
The DG also said that the training has three components, namely; sensitisation, capacity building and empowerment grant.
While declaring the training open, Gombe State Governor, Muhammadu Inuwa Yahaya, said that the programme was timely, following the economic hardship in the country.
“The programme would contribute to the economic development of the state and the country at large,” the Governor said.
Inuwa Yahaya, who was represented by the Permanent Secretary, General Services, office of the SSG, Alhaji Abdulkadir Adamu, appreciated SMEDAN and reiterated the government’s commitment to work with it for more opportunities for rural businesses.
He also said that the state government had organised an investment summit which attracted many investors into the state, saying, “This may not be unconnected with the business friendly environment of the state.”
In his remarks, Commissioner of Trade, Industry and Tourism, Alhaji Nasiru Mohammed, said that the training would enable the rural enterprise to acquire the needed business techniques as well as empower them with knowledge and skills.
He further said that Governor Inuwa Yahaya had empowered over 2,000 Small and Medium Enterprises in the state and also established 1,000 hectares of land Industrial park to serve as an export processing zone.
He said, “This is a platform that will attract domestic and foreign investors to come and invest.”
He commended SMEDAN for organising the training and also encouraged the participant to be attentive, learn the techniques that will improve their businesses.
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