Goddy Egene
Nigerian companies have raised over N800 billion bonds from the capital market in the first half of 2021 (H1) just as predicted by Norrenberger in its 2021 Economic Outlook Report.
Norrenberger, a financial services group, had predicted in its 2021 economic outlook report published in December 202o that yields on fixed income instruments would remain low and thus was expected to result in many corporate borrowers to see bonds as a suitable source of capital to cover their increasing cost of operations.
The Report titled “Seizing The New Reality,” was designed for local and foreign investors who seek to understand the investment/capital market in Nigeria. The report had explained that while major policies and actions from government authorities and international organisations should be enough to restore economies to the growth path, aggregate consumption was expected to grow at a gradual pace.
“With the announcement of the federal government’s N5.06 trillion deficit in the 2021 budget and the activities of corporate borrowers, we expect minimal impact on fixed income rates. We also project corporate issues between N2 trillion and N3 trillion, for a meaningful impact on yields. In our opinion, rates would remain low over the short term while pressures build-up for an upward movement in yield over the medium term,” Norrenberger had said.
Various companies have taken advantage of the low performance in the fixed income market to raise bonds at rates below 10 per cent to the tune of N800 billion. Notably, three issuers namely, Dangote Cement Plc (N300 billion) and MTN Nigeria Plc (N100 billion) and BUA Cement Plc (N115 billion) raised over 60 per cent of the total bond raised in the market. Other issuers include:; Fidelity Bank Plc who raised N41.213 billion; Flour Mills of Nigeria Plc raised N29.8 billion; Nova Merchant Bank raised N10 billion; Emzor Pharmaceuticals raised N13.7 billion; while Mecure Industries accessed the market for N3 billion just as CardinalStone Financing SPV Plc raised N5 billion; C& I Leasing Plc (N10 billion); CERPAC (N15 billion); Coronation Merchant Bank (N30 billion).
On the equities market, Norrenberger also posited that activities of the bears would outweigh the positives in the equities in 2021 based “on the limited upsides of stocks given the overbought status, mid-term uncertainties, the weak macroeconomic backdrop and thin foreign investors’ participation.”
Norrenberger is an integrated financial services group that provides individuals and institutions with an extensive range of financial services including funds and investment management, financial advisory, structured and alternative finance, foreign exchange brokerage amongst others.
