The Nigerian Exchange Limited (NGX) witnessed an improved patronage in 2024 as it recorded about N12.17 trillion worth of both Federal Government of Nigeria (FGN) Bonds and Corporate listings.
This emerged as the Securities and Exchange Commission (SEC) stated its preparedness to improve the regulatory framework with regards to borrowing by governments and corporates.
Director General of the Commission, Dr. Emomotimi Agama who disclosed this, said it became necessary given the critical role borrowing plays in the financial system.
However, the data from the NGX showed that while the need to bridge the budget deficit drove the FGN bonds listings, business operations enhancement and expansion among others influenced the listings by corporates.
Data obtained from the NGX showed that in 2024, about N5.95 trillion worth of FGN Bonds was listed on the bourse, while corporate listings, including corporate bonds and memorandum listings, accounted for N6.2 trillion.
FGN Bonds, issued by the Debt Management Office (DMO) on behalf of the Federal Government, were a key part of the listings.
The largest FGN bond listings in 2024 included 873,527,020 units of 18.50 percent FGN FEB 2031, valued at N873.53 billion, and 621,382,074 units of 19 percent FGN FEB 2034, worth N621.38 billion. Also, a supplementary listing of 282,625,193 units of 18.50 percent FGN FEB 2031 was recorded, valued at N282.63 billion.
Increased participation in the FGN Bond market by Pension Fund Administrators (PFAs) was evident during the year, as high inflation continued to erode returns in other investment segments of the capital market.
On the corporate side, Sovereign Trust Insurance Plc opened the year with a January listing of N1.43 billion from its Rights Issue of 2,841,116,504 ordinary shares at 50 Kobo per share on a 1-for-4 basis. Also, Ellah Lakes Plc followed with a N2.19 billion listing, while Chapel Hill Denham Management Limited listed N11.58 billion.
In March, Transcorp Power Plc made a significant impact with a listing of N1.8 trillion through 7.5 billion ordinary shares at N240.00 per share, boosting market liquidity.
April saw Emerging Africa Asset Management Limited list N5.55 billion, while VFD Group Plc listed N12.5 billion following its Rights Issue of 63,342,455 ordinary shares at N197.33 per share on a one-for-three basis. Royal Exchange Plc added N1.56 billion to the market in the same month.
Other notable listings in 2024 included: AVA Global Asset Managers Limited, which listed N4.08 billion, and Cadbury Nigeria Plc, with a listing of N7.04 billion in May. In June, Multi-Trex Integrated Foods Plc added N2.5 billion to the Exchange. Also, the month of July saw Tantalizers Plc list N1.07 billion, Wema Bank Plc list N39.95 billion, and Notore Chemical Industries Plc contribute N105.79 billion. In August, International Breweries Plc listed N516.22 billion via a Rights Issue, while Japaul Gold Ventures Plc raised N20 billion through a private placement. October featured significant listings, including C & I Leasing Plc with N822.92 million via debt-to-equity conversion, Aradel Holdings Plc with a massive N3.05 trillion by introduction, and Nigerian Breweries Plc, which listed N548.73 billion through a Rights Issue.
Analysts attributed the strong demand for FGN Bonds to attractive yields, which offered investors high returns on their investments. They noted that the oversubscription levels highlighted confidence in the federal government’s ability to meet its debt obligations.
The appetite for FGN Bonds reflects a preference among PFAs and other investors for low-volatility instruments that guarantee capital returns, even with relatively lower yields.
Meanwhile, SEC has stated its preparedness to improve the regulatory framework with regards to borrowing by governments and corporates.
Agama, who disclosed this, said it became necessary given the critical role borrowing plays in the financial system.
“Improving the framework for borrowing is very important because borrowing is part of the financial system and we can only make much of the move we want to make if there is enough funding.
“Hence, we want to be sure of sustainability in both government borrowing, municipal and state governments particularly with the new Supreme Court order regarding the 774 local government areas receiving direct subvention from the federal government.
“It therefore becomes important that we have in the management of such resources via strategic and focused borrowing to help the developments in those sectors,” Agama was quoted to have said in a statement.
The SEC chief executive noted that for corporates, the Commission was changing the landscape with the new rules on Central Counter Parties (CCPs), adding that the new rules on CCPs had become so critical for Nigeria’s development, especially for corporates in raising capital.
“As a Commission we have established those new rules and they are going to be functional in 2025. We want to make borrowing a seamless and effortless process for Nigerian companies.
“It is very important that as we drive the growth of the Nigerian capital market, we also drive new products and new opportunities for every Nigerian. Nigeria for a long time has been seen as a mono product market, but the Year 2025 will be different because we will continue to drive the process of introducing derivatives into the capital market.
“That is not possible without the laws and regulations that will help us do this better. To build confidence in derivatives trading, we hope to provide a clear direction of these transactions.
“To build confidence in derivatives trading, we aim to provide a clear exemption of these transactions from general insolvency laws, creating a safer and more predictable trading environment,” he stated.
According to him, the Commission was creating a safer trading environment, building confidence and attracting more players to the market, hence, it must provide enabling regulations and laws.
Ndubuisi Francis and Kayode Tokede
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