The Federal Government of Nigeria has secured $2.25 billion in funding from the World Bank, comprising two key financial operations aimed at economic stabilization and support for vulnerable populations. The package includes $1.5 billion Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and $750 million Nigeria Accelerating Resource Mobilization Reforms Program-for-Results. This funding is intended to provide immediate financial and technical support for Nigeria’s urgent economic stabilization efforts, enhance non-oil revenue generation, and safeguard oil revenues to promote fiscal sustainability and improve public service delivery. Key details include a 40-year term with a 10-year moratorium with a nominal interest rate of 1%. This initiative is part of a broader effort to support Nigeria’s fiscal sustainability and economic resilience. The approval, announced by the World Bank on June 13, 2024, follows recent discussions at the International Monetary Fund and World Bank Spring meetings, where Finance Minister Wale Edun highlighted the nation’s qualification for this significant funding support.
Money Market
Interbank market liquidity opened the last trading session of the week positively, standing at N132.92 billion. This marked a significant turnaround after a prolonged period of negative liquidity levels due to the NTB auction debit. The improved liquidity was attributed to the early FAAC inflow into the system. Consequently, on a week-over-week basis, the Open Buy Back (OBB) rate decreased by 432 bps to 25.63%, and the Overnight (O/N) rate fell by 440 bps to 26.25%.
We anticipate that rates will remain at their current levels.
Treasury Bills Market
The Treasury Bills Market opened the week with mixed signals with increased activity focused on mid-to-long term maturities. However, by midweek, participants traded cautiously in anticipation of the NTB auction.
At the auction, the DMO offered ₦44.23 billion across three maturities—91, 182, and 364 days. The total bid volume reached ₦407.76 billion, but only ₦55.22 billion was allotted. Stop rates closed at 16.30%, 17.44%, and 20.50% for the respective tenors, reflecting a decline of 20 bps, 6 bps, and 17 bps compared to the previous auction.
Following this auction, market rates decreased, lowering the average benchmark yield by 12 bps week over week, settling at 21.80%.
We anticipate a calm start to the next trading session.
FGN Bond Market
The FGN Bonds market traded in a mildly bearish mode this week due to the constrained liquidity level noticed for the most part of the week. Hence, the average benchmark yield increased by 3 bps WoW, ending the week at 18.63%.
We anticipate a continuation of this trend in the upcoming trading session.
FGN Eurobond Market
Despite the positive US CPI data indicating a cooling inflation, FGN Eurobonds opened in a bearish mode due to risk-off sentiments triggered by the FOMC decision to reduce its Dotplot analysis from three cuts to one cut, and ongoing political tensions in France. Consequently, the average benchmark yield increased by 9 bps week over week, settling at 9.75%.
We anticipate this trend to persist.
Currency Market
The value of the Naira to the dollar strengthened by 9 bps week-on-week to print at ₦1,482.71/$ this week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
This week, the local stock market exhibited a bullish trend in 3 out of 4 trading sessions. The NGX All-Share Index increased by 9 bps day-on-day and 71 bps week-on-week (WoW), closing at 99,925.29 points. Consequently, the year-to-date growth rose to 33.64%, and the market capitalization increased by ₦0.386 trillion WoW, reaching ₦56.526 trillion. The weekly market breadth was 2.08x, with 50 stocks declining compared to 24 advancing.
Analyzing trade data on a WoW basis, the overall trading volume decreased by 18.02% to 318.10 million units, and the total traded value dropped by 32.68% to ₦4.95 billion. Week-to-date (WTD), the most actively traded stocks by volume were FIDELITYBK, ACCESSCORP, and ZENITHBANK, with total trades amounting to 938.82 million units, 222.73 million units, and 189.61 million units, respectively. In terms of value, the most traded stocks WTD were FIDELITYBK, ZENITHBANK, and GTCO, with total values of ₦9.35 billion, ₦6.63 billion, and ₦4.45 billion, respectively.
We expect a continued interest in fundamentally sound stocks.
