By Bamidele Famoofo
Business has never been so good in the last five years at the FMDQ OTC Securities and Exchange Market as it was in 2018, when market turnover hit an all-time high of N182.86 trillion.
Aggregate transactions in the fixed income and currency (FIC) market increased by N40.83 trillion or 28.75 per cent from N142.03 trillion recorded in 12 months in 2017. Figures provided by the FMDQ showed that market turnover has recorded a consistent increase since the market commenced operations in the last five years. The only exception was in 2016, when turnover dropped to N113.66 trillion from N137.43 trillion in 2015.
“The year 2016, challenged and beleaguered with plummeting oil prices, limited access to foreign exchange (FX), high inflation, low investor confidence (both local and foreign), etc., had a significant impact on trading activities,” FMDQ explained. But despite the overall 17 per cent year-on-year (YoY) decline recorded in 2016, the OTC Exchange experienced positive growth in the foreign exchange derivatives product line, propelled by the introduction of the OTC FX Futures product into the market.
Meanwhile, annual market turnover increased from N137.43trillion in 2015 to N182.86trillion in 2018, representing an increase of 30.1 per cent.
Analysis of trading in 2018 revealed that treasury bills (TBs) remains the toast of investors as it contributed to about 40 percent of aggregate turnover. N78.09 trillion was spent on buying TBs papers in the review period, representing average monthly investment of about N6.51 trillion while foreign exchange followed with N51.14 trillion representing 28.0 per cent of total market turnover in the review 12 months period. Repurchased agreements/ buy-backs attracted N30.18trillion investment as at December 31, 2018, which accounts for 16.5 per cent to total turnover.
The commercial paper segment of the FMDQ market became the alternative source of short-term funding for corporates in 2018 as renowned companies like FBNQuest Merchant Bank Limited, FSDH Merchant Bank Limited among others sourced for capital to finance some projects.
“The OTC Exchange has, following the due diligence of the responsible Board Committee approved the successful registration of the Mixta Real Estate Plc N15.00 billion CP Programme and the Eterna Plc N10.00 billion CP Programme. These are in addition to the approval for formal admission and quotation of the FBNQuest Merchant Bank Limited N7.42 billion Series 1 – 4 CPs under its N100.00 billion CP Programme and the FSDH Merchant Bank Limited N257.57 million Series 7 and N15.08 billion Series 8 CPs under a N30.00 billion CP Issuance Programme on the FMDQ platform,” FMDQ disclosed.
Chief Executive Officer of FMDQ, Bola Onadele.Koko, noted that by quoting these CPs on FMDQ, these issuers were availed benefits that include, but are not limited to, enhanced investor confidence in the issuer, transparent/relevant information disclosure on the issue, effective price formation and global visibility.
“As these corporate entities and a host of others continue to effectively and sustainably meet their funding needs, as well as contribute to the development of the nation’s debt markets, FMDQ will continue to take crucial steps, in collaboration with market stakeholders, towards promoting transparency, governance, integrity and efficiency in the Nigerian CP market,” he said.
In the review year (financial year ended December 31, 2018), two notable corporate giants, Flourmills of Nigeria Plc and Union Bank of Nigeria Plc approached the platform of FMDQ to raise fresh capital in the Corporate Bond segment to finance their operations.
According Onadele.Koko, FMDQ formally admitted the listing of the Flour Mills of Nigeria Plc N10.11 billion Series 1 and N10.00 billion Series 2 Senior Unsecured Fixed Rate Bonds under its N70.00 billion Bond Issuance Programme (“the FMN Bonds”) on its platform.
The proceeds of the FMN Bonds will be used to refinance existing debt obligations of the company and streamline its maturity profile.
Also, the board listings, markets and technology committee of FMDQ approved for listing on FMDQ in 2018, the Union Bank of Nigeria PLC N7.19 billion 3-Year 15.50 per cent Series 1 Senior Unsecured Fixed Rate Bond and N6.31 billion Series 2 7-Year 15.5 per cent Series 2 Senior Unsecured Fixed Rate Bond (the “Union Bank of Nigeria Bonds”) under its N100.00 billion Debt Issuance Programme on its platform.
Stanbic IBTC Bank Plc emerged the leader among 10 banks that are registered dealers in the FMDQ OTC Securities Exchange Market as at November, 2018 in terms of turnover value. Access Bank Plc and United Bank for Africa Plc emerged second and third respectively in the top 10 league. The three leading dealers collectively accounted for 58.44 per cent, about N73.13trillion of turnover value in this sub-section of the market.
Meanwhile, the top 10 dealing members (banks) accounted for 75.77 per cent about N125.14 trillion of the overall turnover in the market in the review period (11 months) .
Standard Chartered Bank Nigeria Limited ranked fourth in terms of turnover value, followed by Ecobank Nigeria Limited; First Bank of Nigeria Limited; Citibank Nigeria Limited; Guaranty Trust Bank Plc; Coronation Merchant Bank Limited and Zenith Bank Plc.