The Nigerian Federal Government plans to seek a supplementary budget of N6.6 trillion to fund the Accelerated Stabilisation and Advancement Plan (ASAP), aimed at advancing President Tinubu’s economic priorities. This plan focuses on critical sectors such as agriculture, energy, health, and business support. Key initiatives include unbundling and commercializing the Transmission Company of Nigeria (TCN), procuring 7 million smart meters and 150,000 distribution transformers, and increasing electricity supply to 6 GW by December 2024. Nearly half of the budget is allocated to energy projects, while 27% will support business initiatives. The healthcare sector will see government-funded tuition for healthcare workers, expanded insurance coverage, and the availability of essential medicines at lower costs. To facilitate ASAP’s implementation, President Tinubu will issue 20 Executive Orders covering tax exemptions, import duty suspensions, and various fiscal and operational reforms. Additionally, the plan addresses pipeline vandalism in the oil sector and promotes sustainable energy sources to stabilize and advance Nigeria’s economy.
Money Market
Market liquidity opened the day in a deficit of ₦90.43 billion. Week-on-week, the Open Buy Back (OBB) rate and the Overnight (OVN) rate increased by 86bps and 71bps to 29.95% and 30.65%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The Treasury Bills market traded on a mildly active note this week. The CBN issued the OMO auction announcement offering ₦250 billion across the maturities. While total subscription stood at ₦518.95 billion, ₦513.95 billion was sold. At the auction, stop rates on the 105-day printed at 18.74% while the stop rates for the mid and long tenured bills declined by 5bps and 1bp to close at 19.59% and 22.33%, respectively. The NTB auction was also held where the DMO offered ₦221.13 billion across the standard maturities. However, a total of ₦278.43 billion was sold while total subscription stood at ₦713.89 billion. Stop rates on the 91-day bill remained unchanged at 16.50%. While the stop rate on the 182-day bill rose by 5.1bps to 17.50%, the 364-day dipped by 2bps to close at 20.67%. Sequel to the auction, the newly issued 5-June-bill remained largely offered with trades consummated above the stop rate at 20.75%. We saw the 27 May bill quoted 22.10/21.85. In addition, the Feb 2025 bills experienced a bearish tilt with the 20 Feb bill offered at 20.40% with the 6-feb bill traded as high as 21.00%. Week-on-week, the average benchmark yield lost 13bps to close at 21.59%.
We expect a calm start to the week as the illiquidity persists.
FGN Bond Market
The FGN local bond Market traded on a calm note with demand skewed to the FEB 2034 bond quoted 19.92/19.85%. The new 2027 bond was bid at 19.65 and offered at 19.50% while trades were consummated on the new 29s at 19.35%. We also saw minimal demand on the off-the-run 29-year bond bid at 17.52% while offers were scarce. Furthermore, we saw firm bids on the new 33s at 19.97% while offers were at 19.95%. Week-on-week, the average benchmark yield rose 4bps to 18.61%.
We expect the weak sentiments to persist.
FGN Eurobond Market
The FGN Eurobond market traded on a mixed bias this week on the back of varying macroeconomic data. The ISM Manufacturing PMI printed lower at 48.7 vs. the consensus of 49.6 and a previous of 49.2. We also saw the S&P Global Manufacturing PMI print higher at 51.3 vs 50.9 expected (50.9 prior). Factory Orders grew 0.7% MoM versus 0.6% consensus. Furthermore, the JOLTS openings data printed at 8.059M below the expectation of 8.34M. While the ISM Services PMI printed higher at 53.8 vs 50.8 consensus and 49.4 prior, the ADP Employment Change printed at 152K vs expectations of 173K. Initial Jobless Claims printed higher at 229K vs 220K consensus and 221K previous. Finally, the Nonfarm Payroll showed that 272K jobs were added against the expectations of 185K jobs. Week-on-week, the average benchmark yields gained 4bps, settling at 9.66%.
We expect a bearish start to the week.
Currency Market
The value of the Naira to the dollar appreciated by 0.13% to print at ₦1483.99/$ this week at the Nigerian Autonomous Foreign Exchange Market Window.
Equities Market
The local stock exchange concluded the trading day on a positive trajectory, with the benchmark NGX All-Share Index (ASI) inching up by 9bps to settle at 99,221.14 points. However, on a week-over-week basis, the ASI experienced a slight decline of 8bps, bringing the year-to-date return to 32.69%. Today’s gains were driven by appreciations in Zenith Bank (+0.76%), Access Corporation (+0.29%), and OANDO (+3.91%), which successfully offset losses in NB (-1.97%), Guaranty Trust Holding Company (-0.13%), and Fidelity Bank (-5.64%). Consequently, market capitalization saw an uptick of ₦0.05 trillion, reaching ₦56.14 trillion. Despite this, the market breadth was negative at 0.94x, as 34 gainers were outweighed by 36 decliners.
On a weekly perspective, both volume and value of trades witnessed a downturn, decreasing by 10.59% and 14.25% to 388.02 million units and ₦7.35 billion, respectively. Within the weekly volume leaderboard, Fidelity Bank led with 229.61 million units traded, followed by Access Corporation at 194.34 million units and Veritas Kapital at 159.86 million units. In terms of trade value, Guaranty Trust Holding Company (GTCO) emerged as the top equity with transactions totalling ₦3.83 billion, with Access Corporation and Airtel Africa trailing at ₦3.34 billion and ₦2.45 billion, respectively.
