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FG raises N2.36trn bond from capital market

Onyema: Corporates generate N192bn for expansion, debt refinancing

Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said that the Federal Government of Nigeria dominated issuances in 2020, raising over N2.36 trillion. Onyema, who stated this at the 2020 market recap/ 2021 outlook, said the Federal Government accounted for 92 per cent of total bond issuances in the market. He noted that corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.

“Capital-raising activities in the fixed income market increased significantly in 2020. The NSE’s bond market capitalization rose by 35.52 per cent from N12.92 trillion in 2019 to N17.50 trillion,” he said. Delivering his presentation, Onyema stated: “The year 2020 was indeed a historic one for global capital markets. Facing buffeting headwinds, world markets saw sharp swings and steep losses, but largely remained resilient and orderly amid rising uncertainty.

“For The Exchange, renewed investor optimism, coupled with improved economic conditions and low fixed income yields, propelled a year end bull run. Of 93 global equity indices tracked by Bloomberg, the NSE All Share Index (ASI) emerged the best-performing index in the world, surpassing the S&P 500 (+16.26 per cent), Dow Jones Industrial Index (+7.25 per cent) and other global and African market indexes to post a one-year return of +50.03 per cent.” On product performance, Onyema said: “The Nigerian equities market got off to a strong start in 2020, returning 10.4 per cent by the eighth trading session. By October, the equities market entered a much awaited bull run.

“Buoyed by the formal declaration of the U.S. president-elect, Joe Biden, unattractive fixed income yields and better-than-expected corporate earnings, the NSE ASI recovered from Q1’20, to close the year at 40,270.72 (+50.03 per cent) and erase losses of -14.90 per cent recorded in 2019.

“During its remarkable year end run, the ASI gained 6.23 per cent in a single trading session, which triggered a 30-minute halt of trading on all stocks for the first time since the NSE Circuit Breaker was introduced in 2016 to safeguard market integrity in periods of extraordinary volatility.

“At the close of the year, the NSE’s equity market capitalization was up by 62.42 per cent from N12.97 trillion in 2019 to N21.06 trillion in 2020, while market turnover saw an uptick of 7.25 per cent, from N960 billion in 2019 to N1.03 trillion in 2020. “Although, Initial Public Offering activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37 per cent to N1.42 trillion, from N148.77 billion.

“Also noteworthy is that for the second consecutive year, equity market transactions were dominated by domestic investors who accounted for 65.28 per cent of market turnover by value (Retail: 44.98 per cent; Institutional: 55.02 per cent) while foreign portfolio investors accounted for 34.72 per cent.” He said that it would consolidate on the benefits of demutualization in the coming year. Onyema also said that NSE intends to aggressively pursue cutting-edge products and services, access new markets and deliver better value to its stakeholders. According to him, “the year has started on a positive note as the ASI has already returned 2.0 per cent after 11 trading sessions.

We expect the marginal reopening of businesses, normalization of the economy and revenue-diversification drive of the Nigerian government to elicit positive sentiments throughout the year. Our growth expectations should be noted with caution, as the recent second wave of COVID-19 in Nigeria and globally, may slow down renewed social and economic activities. “The Exchange also intend to aggressively pur-sue cutting-edge products and services, access new markets and deliver better value to its stakeholders.”

He said 2020 was, indeed, a historic year for global capital markets, with several headwinds, including an unprecedented COVID-19 pandemic. Onyema said the outbreak of the novel coronavirus and its rapid spread across the globe in the first quarter of 2020 triggered panic selling in global investors.

He disclosed that global capital markets lost $18 trillion due to the pandemic in February and March 2020 alone. “Several equity market indices lost up to 20 per cent of their value in the second week of March when the World Health Organisation declared COVID-19 a pandemic,” Onyema said. On investor protection, he said NSE paid compensations totalling N17.02 million to 49 investors/ claimants who suffered pecuniary losses in 2020 through its Investor Protection Fund. Onyema also said NSE facilitated recoveries of shares worth N305.11 million for investors in 2020.

 

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