Chinwendu Obienyi
Over the last century, recessions have always started by sustained periods of high-interest rates, inflation but never a virus.
No doubt, the COVID-19 pandemic has eaten deep into the fabrics of China and the rest of the world and this had the Bank of America declaring that the world is facing a virus induced recession.
Between December 2019, when the killer disease started, and now, the global equity market alone has lost more than $24 trillion in value, more than the $22 trillion in United States GDP, as reported by the Bank of America in its research journal. The damage the contagion inflicted on the world economy has typically lasted for more than three months and still counting. This has of course, triggered panic across the world and shaken the confidence of investors with nearly a third of the global market capitalization shaved off from the global equities markets.
The situation is not different in Nigeria as the current business climate has been marred by the impact of the pandemic which have seen most corporates and business entities look to the debt capital markets as a viable avenue to efficiently raise capital in order to meet their financing needs towards business expansion and/or working capital management, amongst others.
FMDQ’s efforts
Only recently, Nigerian debt capital market organiser, FMDQ Securities Exchange Limited, announced that it admitted over N23 billion debt securities on its platform in June 2020.
The exchange explained that this was part of efforts to empower the Nigerian financial market, especially corporates and business entities, by providing a choice platform for registrations, listings, quotations, and trading of debt securities.
Daily Sun investigations reveal that the exchange approved the listing of the FBNQuest Merchant Bank Funding SPV Plc Series 1 N5 billion Fixed Rate Senior Unsecured Bond, and the quotations of the Coronation Merchant Bank Limited N6 billion Series 9 and N9 billion Series 10 Commercial Paper (CP) notes under its N100 billion CP Issuance Programme as well as the Mixta Real Estate Plc N3.30 billion Series 20 – 23 CP notes under its N20 billion CP Issuance Programme on its platform.
The Exchange also admitted the registration of the Guinness Nigeria Plc N10billion CP Programme, allowing the company to raise funds from the market up to the limit approved within its registered CP Programme as at when the need arises.
In the same vein, Dangote Group of Companies, through its subsidiary – Dangote Cement Plc, raised a total of N250 billion in debt securities within six months in 2020, from its recent debut N100 billion Series 1 Bond (the Dangote Cement Bond) under its N300 billion Bond Programme, which was 150 per cent oversubscribed, to its earlier issued N150 billion commercial paper (CP) notes (series 13-16 under its N150 billion Domestic CP Issuance Programme), all listed and quoted (exclusively), respectively, on the exchange’s platform.
Just last month, Axxela Limited, a portfolio company whose vision is to be the preferred gas & power firm in sub-Saharan Africa, successfully achieved a dual-listing of Axxela Funding 1 Plc N11.5 billion Series 1 Bond, on the Nigerian Stock Exchange (NSE) and the Financial Market Dealers Quotation, over-the-counter (FMDQ-OTC) market.
The Senior Secured Bond Issue with a 7-year fixed rate is part of its N50 billion Debt Issuance Programme issued through a special purpose vehicle – Axxela Funding 1 Plc.
Ä statement from FMDQ said that the admittance of the Axxela bond is testament to the opportunities which the Nigerian Debt Market Capital (NDCM) avails to corporates in diverse business areas and further, to the potential of the market to support stakeholders effectively even as they carry on their activities in the face of the pandemic.
“The Axxela bond, by its listing on FMDQ, shall be admitted onto the FMDQ Daily Quotations List; thus, promoting the much-needed transparency for investors and providing a credible basis for portfolio valuation daily”, the exchange said.
Furthermore, the group said it intends to launch new hedging products to ensure the development of a thriving derivatives market in Nigeria.
Speaking at the company’s virtual 8th Annual General Meeting (AGM) in Lagos, the Group Managing Director, FMDQ, Bola Onadele, noted that the outlook for the company remains bright while adding that with the support and collaboration of its stakeholders, FMDQ is committed to the development of a thriving derivatives market in Nigeria by launching new hedging products in 2020.