Daily Watch – NSE takes final IPO steps, PMI growth track slows

Nigeria is considering a Eurobond sale of between $2.8 billion and $3 billion to help partially fund its 2020 budget after President Muhammadu Buhari wins approval from parliament, the adviser to the country’s finance minister said on Tuesday. “From the onset … the government has made plans for a Eurobond and the president has to make an application to the National Assembly,” media adviser to the finance minister, Yunusa Abdullahi told Reuters. Nigeria’s Eurobond plan comes after Ghana sold a $3 billion Eurobond last week that was five times oversubscribed as investors seeking high-yields demand debt despite the impact a coronavirus outbreak in China could have on its major trading partners in Africa. In 2019, the debt office said it did not tap the international debt market because of time constraints before the end of its budget cycle. Nigeria held its last Eurobond sale in 2018, its sixth outing, where it raised $2.86 billion. Buhari signed a record ₦10.58 trillion ($35 billion) budget for 2020 into law last December, paving the way for a likely return to the international debt market as Nigeria struggles to shake off the impact of a 2016 recession it emerged from the following year. Nigeria’s budget assumes a deficit of 1.52% of the estimated gross domestic product – representing around ₦2.18 trillion ($7.13 billion) to be financed through foreign and domestic borrowing.

Production level, new orders, supplier delivery time, employment level and raw materials inventories grew at a slower rate in January 2020, according to the CBN’s latest Purchasing Managers’ Index survey report. According to the regulator, manufacturing PMI in the month stood at 59.2 index points, indicating expansion in the sector for the 34th consecutive month. The index grew at a slower rate when compared to the index in December of last year. Of the 14 surveyed sub-sectors, 11 reported growth including petroleum & coal products; transportation equipment; paper products; furniture & related products; plastics & rubber products; primary metal; food, beverage & tobacco products; chemical & pharmaceutical products; fabricated metal products; textile, apparel, leather & footwear and cement. The electrical equipment sub-sector remained unchanged while printing & related support activities and non-metallic mineral products recorded declines. At 59.7 points, the new orders index grew for the 34th consecutive month, indicating increases in new orders in January.

The Nigerian Stock Exchange (NSE) will change from a member-owned mutual company limited by guarantee to a public limited liability company with an authorised share capital of 2.5 billion ordinary shares, with about two billion expected to be issued in the immediate period of the conversion. The scheme of arrangement for the demutualisation indicates that the NSE will transit into a holding company, Nigerian Exchange Group (NEG) Plc, which will be the parent company for the Nigerian Exchange Limited, the successor that will carry on the securities trading business of the Exchange, and other subsidiaries. The NSE will transfer its securities exchange licence and other assets necessarily required to carry out its securities exchange function. NSE members are scheduled to meet on 3 March in Lagos at a court-ordered meeting to consider and approve the scheme of arrangement. The Securities and Exchange Commission has granted the scheme its “no objection” approval, paving the way for the continuation of other processes.

The MTN Group has said Nigeria, its largest market, significantly contributed to its healthy profit growth Last year. This is coupled with the firm’s improved operational performance across the business and the proceeds from asset sales. Headline earnings per share increased by between 30% and 50% in 2019, even after a downward adjustment from a change in reporting standards, the firm said after the market closed on Tuesday. According to a spokesman of the company, disposals including minority stakes in two tower joint ventures for $540 million also helped support growth. The shares gained 2.4% to 85.08 Rand as of 9:22 a.m. on Wednesday, the highest level of 2020 to date. The largest telecom company in Africa is looking to raise as much as 60 billion Rand (₦1.08 trillion) from an ongoing asset-sale plan, with further tower businesses and a stake in the carrier’s Nigerian unit up for sale. The company has more than 20 markets across Africa and the Middle East.