As Tier-One Banks Raise FIC Markets Turnover to N24tn in 2 Months…

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Fixed Income and Currencies markets make over N24 trillion turnover within two months this year, with three top tier banks accounting for about 61 per cent of the value, reports Bamidele Famoofo

Investors in Nigeria’s Fixed Income and Currencies (FIC) markets splashed about N24.27 trillion or US$71.97 billion on the various investible instruments on offer as at the end of February. However, Deposit Money Banks (DMBs), also known as commercial banks, were key drivers of turnover in the markets in the review period.

Specifically, statistics made available by the FMDQ OTC Securities Exchange in the review period showed that three top-tier banks among the 10 licensed Dealing Member Banks on the FMDQ League table accounted for 61.01 per cent or N11.05 trillion of the turnover value between January and February.

Top Dealers

The three top banks that drove turnover in the review period were Stanbic IBTC Bank Plc, Access Bank Plc, and United Bank for Africa Plc. Stanbic IBTC Bank Plc, named first among the top three that accounted for N11.05 trillion, traded for the overall over-the-counter (OTC) market. It was also the first among the top 10 dealing banks licensed by the CBN to transact business in the market in the period.

Besides the three leading banks licensed by the Central Bank of Nigeria (CBN) to transact business under the platform of the FMDQ OTC Securities Exchange in the review period, there were seven others which accounted for N7.06 trillion of total turnover value in the review period. They include Standard Chartered Bank Nigeria Limited; Ecobank Nigeria Limited; Citibank Nigeria Limited; and First Bank of Nigeria. Other dealing member banks on the FMDQ League Table in the order of ranking include, Union Bank of Nigeria Plc; First City Monument Bank Limited; and Guaranty Trust Bank Plc.

In all, the top 10 DMBs accounted for 74.63 per cent or N18.11 trillion of the overall turnover in the market.

Breakdown

The total turnover for January and February amounted to N24.27 trillion. Trading activities in Treasury bills (T.bills) contributed the largest to overall turnover, accounting for 41.93 per cent of the market.  Foreign Exchange (FX) market transactions (Spot FX and FX Derivatives) accounted for 35.24 per cent while Repurchase Agreements (Repos)/Buy-Backs product categories (Repos/Buy-backs) accounted for 16.02 per cent.  Bonds and Unsecured Placements and Takings represented 5.94 per cent and 0.88 per cent, respectively, of overall market turnover.

T.bills worth N10.18 trillion (about $30.18 billion) was traded in the market in January and February.  In the Foreign Exchange segment of the market, turnover value stood at N5.80 trillion (about $ 17.18 billion).

Repurchase Agreement/Buy- Backs was next on the market’s product categories, accounting for N3.89 trillion (about$  11.53 billion) of turnover value in the review period while transactions in Foreign Exchange Derivatives attracted  about N 2.76 trillion (about $5.03 billion) from dealing member banks  and other retail investors as contribution to total turnover value. Over N1 trillion was invested in the Federal Government of Nigeria (FGN) Bonds in the period at N1.43 trillion (about $4.3 billion).

Average daily turnover in the FIC markets during the 39 business days recorded in the period stood at N622.35 billion (about $1.85 billion)

The FMDQ OTC Market Turnover Report shows the turnover on all products traded on the FMDQ secondary market – FX, Treasury Bills (T.bills), Bonds – Federal Government of Nigeria Bonds, other bonds (Agency, Sub-national, Corporate and Supranational) and Eurobonds) – Commercial Papers and Money Market (Repos/Buy-Backs and Unsecured Placements/Takings). These figures exclude primary market auctions in T.bills and bonds.

The data, collated from the weekly trade data submissions by FMDQ Dealing Member (Banks) (DMBs), represents trades executed among the DMBs, DMBs and Clients, and DMBs and the CBN.

 Capital Sourcing

Some notable capital sourcing activities took place on the platform of the FMDQ OTC in the review period.  For instance, a major mileage was recorded within the first two months of the year with the admittance of the FSDH Merchant Bank Limited N4.51 billion Series 5 and N14.05 Series 6 commercial paper (CP) notes under its N30.00 billion CP Debt Issuance Programme, for quotation on its platform.

“The successive admittance of these securities, following due approval from the FMDQ Board Listings, Markets and Technology Committee, attests to the highly efficient time to market and ‘second-to-none’ Listings and Quotations service offered by FMDQ,” a statement from the FMDQ OTC disclosed. The statement added, “FMDQ recognises the potential of a fully-functional DCM and shall continue to innovate and provide efficient services, as may be necessary, to support issuers, investors, intermediaries and other stakeholders, towards achieving an operationally excellent and competitive DCM.”

Additionally, for the first time in the history of the market, a microfinance bank approached the market to raise capital to grow micro-businesses in the Nigerian economy.

“FMDQ admitted on its platform the first ever microfinance bank bond in Nigeria – the LAPO MFB SPV PLC Series 1 N3.15 billion 17.75% 5-year Fixed Rate Senior Unsecured Bond (the LAPO MFB SPV Bond) under a N20 billion Bond Issuance Programme,” the market reported.

Associate Vice President, Market Architecture Division, FMDQ, Ms. Jumoke Olaniyan, applauded LAPO MFB for successfully raising N3.15 billion from the domestic capital markets, and for indubitably setting the pace for other microfinance banks planning to raise capital in the Nigerian DCM. Olaniyan commended the issuer for joining the league of corporate entities whose debt profiles had been raised via the value-packed listings and quotations service offered by FMDQ. She reiterated the OTC Exchange’s commitment to continually align its strategies and innovation to serve and provide the much-needed support to the players in the DCM.

In his address at a ceremony to commemorate the listing of the bond in March, Managing Director of LAPO MFB, Dr. Godwin Ehigiamusoe, revealed that the demand for capital from micro, small and medium businesses was high, and as a pro-poor financial institution, LAPO Microfinance was committed to the social and economic empowerment of low-income households through provision of access to responsive financial services on a sustainable basis.

“With excellent corporate governance, experienced management, committed staff and extensive footprints across Nigeria, LAPO Microfinance is poised to deliver its core mandate of enhancing financial inclusion by continuously tapping the Nigerian DCM to raise capital to improve lives of the underprivileged,” Ehigiamusoe stated.