The Nigerian Stock Exchange (NSE) has listed fresh capital being raised by quoted company and the federal government to the tune of N202.989 billion in the first five months of the year, 2020.
Most of the funds were raised on the fixed income market and dominated by the federal government. It will be recalled that the fixed income market performed exceptionally well in 2019, as market capitalisation increased by 20.42 per cent to N12.92 trillion from N10.72 trillion in 2018.
Fixed income broadly refers to those types of investment security that pay investors fixed interest or dividend payments until its maturity date. On NSE, the Fixed Income Market Making (FIMM).
This is a platform that allows debt markets participants to trade Exchange listed debt instrument issued by the federal government, state governments or corporations on a transparent order book with firm orders.
The objective of FIMM is to provide liquidity and transparency through an order book with firm orders, pre and post-trade reporting, clearing and settlement solutions.
On May 15, 2020, the Nigerian Stock Exchange listed FBNQ MB Funding SPV Plc’s N5 billion, 10.50 per cent Fixed Rate Series one, Senior Unsecured Bond due 2023 under the N50 billion Bond Issuance Programme.
Also, Primero BRT Securitisation SPV Plc’s N16.5 billion series one, 17 per cent Fixed Rate Bonds due 2026 under its N100 billion Medium Term Bond Program; and Flour Mills of Nigeria’s N7.5 billion, five-Year 11.10 per cent Series three (Tranche B) Fixed Rate Senior Unsecured Bond Due 2025 and N12.5 billion, three-Year 10.00 per cent Series 3 (Tranche A) Fixed Rate Senior Unsecured Bond Due 2023 were listed on NSE.
Federal Government of Nigeria (FGN) through Debt Management Office listed FGN Savings Bonds valued at N206.307 million, 5.131 per cent and N78.672 million of 4.131 per cent on April 3, 2020, while in March the NSE listed N55 billion, N65 billion and N40 billion FGN Bonds.
The Exchange on March 26, 2020 listed Golden Guinea Breweries Plc’s Private Placement of 752.508 million ordinary shares of 50 kobo each at N1.60 Kobo per share, amounting to N1.204 billion.
Capital market analysts believed that the overall weak macroeconomic scenario, the sustained negative market sentiments within the period, coupled with other factors such as falling oil prices, and the Coronavirus (COVID-19) pandemic, among others, will not encourage successful primary market or equity raising activities.
They also believed 2020 would be another record year as corporates seek to take advantage of the lower yield environment occasioned by the liquidity glut expected to characterise the market in first half of the year (H1) from maturing Open Market Operation (OMO) bills.
Meanwhile, the NSE has retooled itself in many ways to remain an attractive destination for issuers. It has built a more responsive market by deploying cutting-edge technology for trading and reducing market infractions through improved market monitoring and surveillance via the use of artificial intelligence.
The exchange has also developed a market structure that has introduced upscale securities listings such as the first ever Sovereign Green Bond (FGN Green Bonds) in an emerging market and the FGN savings bond, which democratised participation in fixed income securities.
Investors have also been provided with better visibility into listed companies as the exchange introduced the Corporate Governance Rating System (CGRS) and CG index, while providing protection by way of the Investors Protection Fund.
The NSE is in the process of introducing e-IPO platform, which will help boost market participation and enhance liquidity in the market. This platform, according to market sources, will enable seamless and efficient public offering subscription.
At the listing of the company’s Bond on NSE, the group managing director, Flour Mills Nigeria Plc, Mr. Peter Gbededo expressed excitement over the listing of the bond on the NSE.
He said, “We are delighted to return to the capital market with such a successful outing, especially with the level of interest shown by investors. The response from the market vindicates our decision to have taken this additional step to diversify our financing options beyond short-term commercial bank debt.
“Furthermore, we are excited about the role NSE is playing in deepening secondary market liquidity thus aligning our market with international best practices, and we look forward to enjoying the benefits of these efforts in our short and long-term instruments.”
Meanwhile, speaking at the listing of FBNQuest MB Funding SPV PLC Bond, the chief executive officer, NSE, Mr. Oscar Onyema, said, “We welcome FBNQuest Merchant Bank’s debut listing of its N5 billion Series one Bond on the Exchange, as we continue to support the bank in meeting its capital raising needs and business objectives.
“We also commend all the parties to the transaction. At the NSE, we are committed to giving issuers and investors a platform to access right-sized capital even in the toughest of times as well as providing opportunities for secondary market trading activities across multiple asset classes, equities, bonds, ETFs.”