This Day (Lagos)

Nigeria: DMO Appoints Stanbic IBTC As Govt Stockbroker

Photo: Leadership
Stanbic IBTC logo

The Debt Management Office (DMO) has appointed Stanbic IBTC Stockbrokers Limited as government stockholder.

The engagement empowers the Stanbic IBTC to provide prices for FGN bonds on the floor of the Nigerian Stock Exchange (NSE) to enable retail investors in particular, buy or sell FGN bonds.

Speaking yesterday at the signing ceremony in Abuja, Director General, DMO, Mr. Abraham Nwankwo, also said the appointment permitted the broker to act as a liaison between the DMO, NSE, stockbrokers and other market participants to ensure that all activities in FGN bonds and other FGN securities that may be listed in future are smoothly effected.

Nwankwo said: "Investors can now access FGN bonds on the NSE, the investing public can now diversify their portfolio further by introducing bonds, it will provide an opportunity for investors to earn regular income on their investments through coupons paid on FGN bonds and it will be an additional and assured means through which investors can sell their FGN bonds before maturity."

He added that further stimulus would be introduced for the bond segment as well as higher volume of transaction both of which would benefit the capital market.

He expressed optimism that the newly-appointed government stockbroker would bring about an improved savings culture by providing access to high quality investment for a wider segment of the population and give the retail investor to the opportunity to contribute to government's development activities including infrastructure, education and health.

However, Chief Executive Officer, Stanbic IBTC Bank, Mrs. Sola David Borha, in her response, expressed confidence that the investing public would be properly enlightened on the bond market through the partnership.

She added that the Nigerian capital market was well-developed to contain occasional shocks.

Meanwhile, the DMO boss also disclosed the agency's internal arrangement to support victims of the recent floods, which had ravaged parts of the country.

He said every member staff of the office had pledged a minimum of five per cent of their November take-home pay to assist affected victims across the country.

He urged support from well-meaning Nigerians to boost current government efforts to demonstrate love and support to fellow countrymen and women in such a difficult time.

He noted further, that a country's growth did not rely totally on gross domestic product (GDP) but includes demonstration of love to each other and those in distress.

Presidential Committee on Flood Relief and Rehabilitation last week raised a whopping N11.35 billion for flood victims.

President Goodluck Jonathan had, in his opening speech, appealed for generous donations to support government's post flood rehabilitation efforts.

Jonathan, who announced a federal government donation of N2.5 billion, said all donations from the private sector are tax deductible.

Lagos Commences Price Discovery on N80bn Bond

Obinna Chima with agency report

Lagos State has initiated a process to gauge investors' interest in its proposed seven-year N80 billion ($507 million) bond sale.

Bloomberg yesterday reported that a coupon guidance for the proposed debt instrument had been given at 12.75 per cent to 14 percent with order requests expected to close on November 19.

Chief Executive Officer, Lagos-based Chapel Hill Denham Securities Limited, Jude Chiemeka whose firm is the sale's lead book-runner disclosed this to Bloomberg.

The proposed size of the issue may change once the book- building process has been completed, according to a term sheet obtained by Bloomberg News.

The proceeds from the sale would be used to fund infrastructure projects including an urban rail line to help ease traffic congestion in Lagos, the state's Governor, Babatunde Fashola had said in an interview.

Lagos state first issued debt in 2008, when it sold N50 billion of five-year securities with a 13 per cent coupon. It concluded a N50 billion seven-year bond sale in April 2010 at a 10 percent coupon, according to data compiled by Bloomberg.

The planned sale comes after borrowing costs for Nigeria's federal government dropped since JPMorgan Chase & Company announced in August that it would add the country's bonds to its GBI-EM index series from October this year.

The yield on the 16.39 percent federal government naira debt due 2022 has dropped 339 basis points to 12.74 percent since the start of August, according to data compiled by the Lagos-based Financial Markets Dealers Association.

Though Lagos is the smallest in land area of Nigeria's 36 states, it is the most densely populated, with about 22 million people living in the metropolitan hub, up from about 17 million in 2006, according to the state government. The regional government is investing in infrastructure to meet the needs of a population it estimates is increasing at 3 percent a year.

Projects to ease the city's traffic congestion include the rail system, which needs a further $1 billion in financing. That project has stalled due to a shortfall in state funds, according to Fashola.

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InFocus

Stanbic Bank Brokers to Manage Nigerian Govt Bonds

Stanbic IBTC logo

Nigeria's Debt Management Office has appointed Stanbic IBTC Brokers Limited as stockbroker to manage government bonds in the capital market. Read more »