To Stay Afloat, Companies Raise N826.64bn CP, Bonds on FMDQ in 7 Months

Kayode Tokede

Companies requiring immediate short-term/long-term capital to stay afloat raised a total of N826.64 billion Commercial Paper (CP) and corporate bonds on FMDQ Exchange in seven months of 2022.

According to the latest financial markets monthly report released by FMDQ Exchange, a total sum of N524.84 billion and N301.8billion were raised by companies through CP and corporate bonds in the period under review, respectively.

The most prominent company that have raised CP on FMDQ Exchange this year was MTN Nigeria Communications Plc.

The telecommunication giant raised a historic N127 billion Series 1 & 2 CP under its registered N150 billion programme. The issuance consisted of two tenors – a 184-day series issuance priced at a 7.50 per cent yield and a 254-day Series 2 issuance priced at an 8.50 per cent yield.

The report for month of July disclosed that, a total value of corporate bonds listed on FMDQ Exchange was N116.00bn representing a 205.26 per cent or N78 billion Month-on-Month (MoM) increase from N38 billion value listed in June 2022.

Similarly, total value of CPs quoted on FMDQ Exchange in July 2022 was N21.16bn, representing a MoM decrease of 48.20 per cent or N19.69 billion from the value of CPs quoted in June 2022.

According to the report, in July 2022, total outstanding value for corporate bonds and CPs increased MoM by 10.95 per cent or N113.80 billion and 1.11 per cent or N5.78 billion to N1,153.50 billion and N524.58 billion respectively.

At the primary market, the Debt Management Office (DMO), according to the report sold Treasury bills (T.bills) valued at N407.55 billion across its fully subscribed auctions in July 2022, representing a 25.20per cent or N137.32 billion MoM decrease in T-bills sold across its auctions in June 2022 (N544.87billion).

“Similarly, the DMO re-opened two (2) 10Y and one (1) 20Y FGN Bonds issues in July 2022, selling FGN Bonds worth N123.84 billion (subceiling the total amount of FGN Bonds offered by N101.16billion), representing a 45.23 or N102.28 billion MoM decrease relative to June 2022 (N226.12billion) for the same FGN Bond issues.

“However, the CBN did not auction OMO Bills in the primary market in July 2022, compared to N40.00billion worth of OMO Bills sold in June 2022,” the report disclosed.

However, the secondary market turnover on FMDQ Exchange in July 2022 was N19.76trillon, representing a MoM increase of 8.54 per cent or N1.55trillion and a Year-on-Year (YoY) increase of 16.45per cent or N2.79trillion, respectively.

The report disclosed that Money Market (MM) transactions dominated secondary market activity in July 2022, accounting for 41.56per cent of the total secondary market turnover.

Total spot market turnover for all products traded in the secondary market was N17.53 trillion in July 2022, representing a MoM increase of 8.30 per cent or N1.34trillion from the turnover recorded in June 2022.

The MoM increase in total spot market turnover was driven by the 40.82per cent or N2.38 trillion and 5.68 per cent or N0.17 trillion increase in MM and FX transactions, respectively, which offset the 16.38 per cent or N1.21 trillion decrease in fixed income (FI) transactions in July 2022.

The increase in MM turnover was driven majorly by an increase in Repo/Buy-Back transactions despite a sharp decline in Unsecured Placements/Takings transactions, while the decrease in FI turnover was driven by the MoM decrease in transactions for all FI products except OMO Bills and Other Bonds.

In the FX Market, the Naira depreciated against the US Dollar, with the exchange rate ($/N) increasing by 1.43per cent or N6.03/Dollar to close at an average of N427.01/Dollar in July 2022 from N420.98/ Dollar recorded in June 2022.

Further, exchange rate volatility increased marginally in July 2022 compared to June 2022 as the Naira traded within an exchange rate range of N424.17-N431.00/Dollar in July 2022 compared to N419.00 – N425.50/Dollar recorded in June 2022.