BusinessDay 26 Mar 2018
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36 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />
ECONOMY<br />
<strong>Mar</strong>kets Intelligence<br />
Nigerian firms can tap into domestic debt market on lower rates<br />
ENDURANCE OKAFOR<br />
Domestic Debt issuances since the start of 2017<br />
Corporate firms in<br />
Nigeria may have<br />
to consider borrowing<br />
at this time, as<br />
treasury bills yields<br />
are falling and government is<br />
cutting down on it domestic<br />
borrowing to tap in the foreign<br />
market, thereby giving room<br />
for Nigeria firms to borrow<br />
through bond issuance.<br />
The Federal Government<br />
usually issue domestic bonds<br />
at a more attractive rates than<br />
the firms in the country can<br />
beat, and as such it was a challenge<br />
for most firms to tap in<br />
the market as investors would<br />
prefer to subscribe to the government<br />
bond with ‘no risk’ to<br />
corporate firms.<br />
Analysts are however of the<br />
opinion that firms will tap into<br />
the bond market as rates which<br />
were up 15- 16 percent last year<br />
are now as low as 13 percent.<br />
The 13th consecutive decline<br />
in inflation rate, increase<br />
Source: FMDQ<br />
in FX liquidity and government<br />
repayment of domestic<br />
debt which has resulted in a<br />
precipitous drop in yields on<br />
treasury bills, were the reasons<br />
for the forecast by the analysts.<br />
In order to lower costs, government<br />
repaid N198 billion<br />
worth of treasury bills in December<br />
2017, instead of rolling<br />
them over,<br />
The Director General of<br />
Debt Management Office<br />
(DMO) said there is money on<br />
the table; rates are lower and<br />
as such stressed on the need<br />
to encourage corporate bonds,<br />
and was also of the opinion<br />
that the reason there were<br />
no many corporate bonds in<br />
Nigeria was because interest<br />
rates were too high.<br />
However, firms like Mixta,<br />
Dufil, Lapo and Viathan Funding<br />
Plc issued corporate bonds in 2017.<br />
Mixta issued on January 17<br />
with a 17 percent coupon, outstanding<br />
value of N4.5 billion<br />
and yield valuation of 14.59<br />
percent, which is to mature in<br />
January of 2022.<br />
While Dufil which issued<br />
in August of the same year<br />
is expecting yield valuation<br />
of 15.32 percent to mature in<br />
September 2022 and has an<br />
outstanding value of N10 billion,<br />
while Lapo and Viathan<br />
both issued in December of<br />
last with outstanding values<br />
of N3.15billion and N10 billion<br />
respectively. They both are to<br />
mature in December of 2022.<br />
Meanwhile, Dangote Cement<br />
Plc said it got approval<br />
from Nigerian regulators to issue<br />
300 billion naira ($833 million)<br />
in local-currency bonds as<br />
it seeks to fund expansion and<br />
refinance debt.<br />
Africa’s largest producer of<br />
building material plans to issue<br />
the debt over three years,<br />
Chief Financial Officer Brian<br />
Egan said during an investor<br />
conference call on Tuesday.<br />
The bond will be issued in<br />
tranches of 50 billion naira at<br />
a time whenever interest rates<br />
are favourable.<br />
Lists of dividend<br />
declared so far...<br />
Continued from page 35<br />
from N156.74 billion as at December<br />
2016.<br />
Profit after tax was up 37.20<br />
percent to N177.93 billion in<br />
December 2017 from N129.65<br />
billion as at December 2016.<br />
GTBank, the largest lender by<br />
market capitalization in Africa’s<br />
largest economy declared a final<br />
dividend of N2.40 per ordinary<br />
share of N0.50, which translates<br />
to N70.63 billion in absolute<br />
figure.<br />
The lender’s pre-tax profit<br />
grew by 21.25 percent to N200.24<br />
billion in December 2017 from<br />
N165.13 billion as at December<br />
2016. Profit after tax followed the<br />
same growth trajectory as it grew<br />
by 28.86 percent to N170.47 billion<br />
in the period under review.<br />
Access Bank declared a final<br />
dividend of N0.40 for every share<br />
of N0.50, which translates to an<br />
absolute figure of N11.53 billion.<br />
An increase in interest expense<br />
by 44.64 percent to N156.40 billion,<br />
a 57.15 percent increase in<br />
impairment charge to N34.46<br />
billion and a loss on investment<br />
securities of N33.40 billion<br />
undermined the lender’s bottom<br />
line (profit) as net income<br />
slumped by 13.32 percent to N62<br />
billion as at December 2017.<br />
Nestle Nigeria declared a<br />
final dividend of N27.50 per<br />
N0.5, which translates to N21.79<br />
billion after multiplying total<br />
number of ordinary shares by<br />
dividend per share.<br />
Nestle Nigeria Plc generated<br />
Naira earnings well above the<br />
levels of the past five years as<br />
the company continues to surmount<br />
the headwinds brought<br />
on by weak consumer spending,<br />
rising input costs and currency<br />
volatility.<br />
According to the company’s<br />
2017 audited financial statement,<br />
net income hit N33.72 billion,<br />
which represents a 325.25<br />
surge from N7.92 billion figures<br />
recorded in the corresponding<br />
period of 2016, which is still<br />
higher than the 5.50 percent<br />
growth recorded in 2013, when<br />
profit was N22.25 billion, as the<br />
chart shows.<br />
Banks have always reward<br />
owners with bumper dividend<br />
more than companies in other<br />
sector as they continue to grow<br />
earnings amid a tough and<br />
unpredictable macroeconomic<br />
environment.<br />
The recent liquidity ease in<br />
the foreign exchange market<br />
since the introduction of a new<br />
foreign exchange policy by the<br />
central bank made dollars available<br />
for lenders and their customers.<br />
This means customers can<br />
now pay back interest on loans<br />
borrowed from bank.