Nigeria’s debt to gasoline suppliers has surged to over $6 billion, doubling since early April, as the state oil firm NNPC struggles to bridge the gap between fixed domestic fuel prices and rising international costs. Despite Nigerian President Bola Tinubu’s move to end fuel subsidies last year, subsequent price caps and currency devaluation have allowed subsidies to reemerge, expected to cost $3.7 billion this year alone. Critics decry these subsidies as inefficient and corrupt, yet they remain crucial to Nigerians amid limited government services and a steep cost-of-living crisis. The situation has led to delayed payments for fuel imports, causing disruptions in supply and fresh fuel queues in major cities like Lagos and Abuja. Nigeria, heavily reliant on fuel imports despite being Africa’s largest oil exporter, faces economic strain exacerbated by past mismanagement of oil revenues and reliance on external loans to bolster foreign exchange reserves.
Money Market
Market liquidity opened the day in a deficit of ₦1.41 trillion. Week-on-week, the Open Buy Back (OBB) rate and the Overnight (OVN) rate soared by 789bps and 753bps to 32.06% and 32.53%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The Treasury Bills market traded on a calm note this week with bills largely offered across the curve. Notably, there were improved offers on the 20-Feb-25, 6-Mar-25, and 10-Jun-25 bill at 21.95%, 21.60% and 22.25%. Nonetheless, we witnessed minimal demand for the 26-June bill with offers seen at 20.40% while trades were consummated on the 17-June OMO bill at 22.30%. Week-on-week, the average benchmark yield rose 25bps to close at 22.41%.
We expect a similar session as the illiquidity persists.
FGN Bond Market
The FGN local bond Market exhibited a subdued tone throughout the week. At the start of the week, we witnessed demand for the May 2033 bond bid at 21.15% while offers stood at 21.10%. However, there was a reversal of this trend with bids as high as 21.40% following the release of the Q3 Bond auction calendar which showed 80-120bn on offer per maturity across the 29s, 31s and 33s. Furthermore, we saw trades executed on the 34s at 20.70% while the 53s was quoted 17.75/17.60. In addition, we saw the 31s and new 29s offered at 20.25% and 19.50%, accordingly. Week-on-week, the average benchmark yield rose by a negligible 1bp to 18.68%.
We expect a calm session as bond appetite remains weak.
FGN Eurobond Market
The FGN Eurobond market traded on mixed sentiments in the week under review. Bearish sentiments ensued despite the ISM Manufacturing PMI printing at 48.5 vs 49.1 expected and Powell’s speech, which underscored progress on inflation while affirming the robustness of the labor market. The bullish bias was influenced by the initial jobless claims which printed higher at 238K vs 235K expected, in addition to the ISM Services PMI printing below expectations (48.8 vs 52.5) and the ADP Employment Change data (150K Vs. 160K expected). In conclusion, the final session of the week was bearish following the release of the Nonfarm Payroll data which showed that 206K jobs were added against 190K expected. Week-on-week, the average benchmark yields slid 6bps, settling at 9.88%.
We expect Powell’s testimony to influence market direction.
Currency Market
The value of the Naira to the dollar depreciated by 0.29% to print at ₦1509.67/$ this week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
The local stock exchange ended the trading day on a somber note, with the benchmark All-Share Index (ASI) falling by 4bps both day-on-day and week-on-week to 100,022.03 points, resulting in a year-to-date return of 33.77%. The day’s negative performance was primarily due to declines in ACCESSCORP (-3.03%), CUSTODIAN (-4.52%), and FBNH (-3.76%), which overshadowed gains in OANDO (+9.68%) and GTCO (+0.32%) Consequently, market capitalization remained unchanged at ₦56.59 trillion. Unsurprisingly, the market breadth was negative at 0.80x, as 45 decliners outweighed 35 advancers.
On a weekly basis, both volume and value of trades witnessed a downtrend, decreasing by 19.04% and 39.08% to 412.66 million units and ₦6.02 billion, respectively. FIDELITYBK led the weekly volume and value boards, trading 693.35 million units valued at ₦7.24 billion. Following FIDELITYBK in volume were UNIVINSURE with 114.35 million units and GTCO with 102.12 million units. In terms of trade value, GTCO ranked second with ₦4.77 billion in transactions, followed by ZENITHBANK at ₦2.30 billion.
