FG heads to FMDQ OTC market for N7.6trn securities listing

FMDQ OTC Plc (FMDQ), an Over-The-Counter (OTC) securities exchange and self-regulatory organisation (SRO) will today play host to the listing of N4.8trillion FGN Bonds and quotation of N2.8trillion Nigeria Treasury Bills (NTBs) on its platform.

This is the first time Treasury Bills are being quoted on Nigeria’s securities exchange.

These securities will be welcomed on the FMDQ platform with a formal ceremony scheduled for today.

The listing of these government securities on the OTC platform further signpost the readiness of Nigeria’s fiscal managers under President Muhammadu Buhari’s administration to search inwards for liquidity to finance government expenses.

This move is even more critical as developments in the international oil market pose a challenge for Africa’s biggest economy by GDP size.

For three straight quarters, the Nigerian economy was run without capital votes to fund critical development projects, even though the government struggled to sustain huge recurrent expenditure, largely on borrowed funds.       

The importance of the N7.6trillion securities listing today, attracts key government personalities from the Debt Management Office (DMO), Central Bank of Nigeria (CBN), FMDQ directors (past and present), among others.

Key activities  include unveiling of the FMDQ Listing  and Quotation Scrolls, presentation of the FMDQ Listing and Quotation Plaques and autographing of the FGN Debt Securities Wall. Also, there will be signing of the FMDQ Listing and Quotation Registers, following which the Listing and Quotation Certificates would be presented to the issuer.

To hedge against the potent risk occasioned by bond’s worst enemy (inflation), Nigerian bond investors field for higher yield to compensate inflation risk.

Nigeria’s headline inflation in May picked up from 8.7percent year-on-year (yoy) to 9percent, with analysts projecting further increase. Nigeria’s foreign exchange reserves have risen sharply to about $32billion on the back of astute management by the Central Bank.

The OTC debt capital market has become a preferred destination for issuers searching for liquidity on their instruments.

For instance, with just three months, the FMDQ OTC debt capital market played host to over N70billion in three banks bond listing -UBA plc (N30.5billion); Stanbic IBTC (N15.44billion); and FCMB (N26billion).

Recently, turnover in the OTC market for the month of June 2015 settled at N9.67trillion, with considerations in the forex (FX) market at N2.47trillion, 14 percent less than the value recorded in May 2015.

On aggregate, there was a reduction in the number of trades executed in June 2015 in the OTC market, compared with the previous month.

Activities at the short-end of the yield curve dominated turnover in the fixed income market with T-Bills maturing in three months or less, accounting for 44 percent of the total fixed income turnover.

Iheanyi Nwachukwu