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| GSK Exit: Shareholders to receive N17.42 per share as it ends Nigerian business. GlaxoSmithKline Consumer Nigeria Plc plans to dissolve the company, paying shareholders N17.42 per share under the proposed Scheme of Arrangement. The UK-based pharmaceutical giant announced its exit from Nigeria on August 3, 2023. Upon receiving the “No Objection” from the Securities and Exchange Commission, the company proposed to cancel all outstanding shares and settle existing shareholders, excluding GSK UK, at a premium of N17.42 per share. Shareholders will receive a Scheme Document outlining the arrangement’s terms after a Court-Ordered Meeting. As of November 3, 2023, GSK’s shares traded at N12.40 on the NGX, reflecting a 101.6% year-to-date appreciation. |
Fitch Affirms Nigeria at ‘B-’, Outlook Stable Nigeria’s ‘B-‘ rating reflects its economic strengths and weaknesses. Nigeria boasts a sizable economy, a well-developed domestic debt market, and abundant oil and gas reserves. However, these advantages are overshadowed by governance issues, minimal non-oil revenue, heavy reliance on hydrocarbons, security concerns, high inflation, and inadequacies in the foreign exchange reserves and exchange-rate framework.The country’s outlook remains stable despite recent strides in reform. The government’s efforts to reduce fuel subsidies and enhance the exchange rate framework have shown promise. Yet, concerns arise due to some reversal of these reforms, leading to uncertainties in the positive momentum’s strength.Reform progress has been commendable, with the quick removal of fuel subsidies and exchange rate unification, supported by Finance Minister Wale Edun and the new CBN governor. However, socio-political challenges, particularly escalating inflation, have impeded certain reforms. Challenges persist in FX liberalization and shortages, impacting economic activities and deterring foreign investments. The CBN’s weakened net FX reserves, uncertainties in positions, and significant off-balance-sheet commitments have clouded the assessment of actual reserves, adding complexity to the economic landscape. The nation faces an ongoing struggle in managing public debt, with persistent issues in interest expenditure and revenue generation. Despite efforts, Nigeria remains confronted by structural challenges that require consistent and sustainable reform measures. |
CBN addresses backlogs CBN has reportedly made significant progress in fulfilling a substantial portion of its outstanding matured FX forwards. This initiative commenced on Monday last week, starting with international banks, aiming to bolster market confidence and optimism. Meanwhile, sources from Punch said three banks received full payment of debts owed: Citi Bank, Stanbic IBTC, and Standard Chartered Bank. The amount of overdue forward payments is estimated at $6.7 billion, according to the Minister of Finance, Wale Edun. |
Forex Turnover The FX market saw a total transaction of $503.95 million last week, with a $98.82 million turnover on Friday. Around $21.005 billion has been transacted in the NAFEM window so far this year, mostly as a result of domestic participants paying off debt. On Wednesday, the highest trading rate was $1,101 for $1. The indicative rates varied from N800.00/$1 to N1100.00/$1, and on Friday, the NAFEM closing rate was N776.14. Notably, N1100.00 and N700.06 were the highest and lowest rates traded on the market, respectively. Furthermore, external reserves increased by $23.93 million from the previously reported amount to $33.396 billion as of October 31, 2023. |
Liquidity Tightening The apex bank tightened Naira liquidity by debiting N758 billion in CRR and issuing N477 billion in high-yielding OMO bills. Sentiments in the T-bills space turned bearish, with limited trading in secondary markets as banks primarily fulfilled demands at the OMO auctions. The CB sold a total of NGN477 billion at the auctions, with the 1-year tenor reaching as high as 17.98% (Discount rate). The bonds market opened on a bearish note, with bond yields rebounding across the curve, especially in the 2053’s, which experienced increased selling interest. The Central Bank’s two OMO auctions further intensified volatility, causing bond yields to trade wider by an average of 150bps across the curve. |
Bottomline Nigeria’s ‘B-‘ rating reflects a sizable economy, a well-developed domestic debt market, and abundant oil and gas reserves. However, governance issues, minimal non-oil revenue, reliance on hydrocarbons, security concerns, high inflation, and forex reserves inadequacies pose challenges. Recent strides in reducing fuel subsidies and improving the exchange rate framework show promise. Though commendable, challenges, including socio-political issues and escalating inflation, have hindered certain reforms. Last week’s financial activities reflect a complex interplay of factors impacting various sectors, from the forex and T-bills markets to the bonds space. Nigeria’s economic strengths are evident, yet challenges persist, influencing the trajectory of reforms and market dynamics. |
