Headlines For The Day – First Ideas Limited

Headlines For The Day

50 years after, OPEC gains still evade Nigeria

A country celebrating 50 years of its Organization of Petroleum Exporting Countries (OPEC) membership, Nigeria is a clear example that a natural resource such as oil is not necessarily a blessing

Nigeria equities gain N8bn as investors buy Capital Hotels, Total, others

Nigeria’s equities market which closed flat on Tuesday was able to gain about N8billion on Wednesday, July 14 as investors showed interest in shares of Capital Hotels Plc and other counters.

Fintech attraction: Investors find benefits outweigh costs in Nigeria

Nigeria’s financial technology (Fintech) companies have increasingly become a top investment destination for foreign investors. To have a piece of the industry’s cake, investors are queuing and waiting for a window of entry.

What trend of protests say about Africa’s two largest economies

It’s been South Africa’s turn this week to expose the frail economic conditions in Africa’s two largest economies. Hiding behind protests against ex-leader Jacob Zuma’s arrest, hoodlums looted and vandalized private properties in Zuma’s home province of KwaZulu-Natal (KZN)

EU plans ambitious new laws to phase out Fossil Fuels

The European Union is planning new laws to phase out coal as an electricity source and wean their economy off fossil fuels as well as imposing tariffs on polluting imports The European Commission’s package of around a dozen legislative proposals, expected on Wednesday,..

COVID-19: Nigeria’s weak recovery calls for concern

Nigeria is in a recovery year, but the sluggishness of the pace remains a source of worry for all stakeholders. The 0.51 percent real gross domestic product (GDP) growth recorded in the first half of this year illustrates the tepid nature of our GDP growth,…

Mainstream media take on Buhari in ‘front-page protest’ against gagging

From July 12, President Muhammadu Buhari’s administration had been the subject of the first-in-a-while protest by Nigeria’s mainstream media against attempts at media gagging, restriction of free speech and onslaught on people’s rights to know

First Bank’s FirstMonie: A tool for financial inclusion

FirstBank provides an array of digital financial services with the use of various payment channels to reach carefully segmented audiences with tailor-made financial solutions. Some of these channels, which have become the toast of customers and the industry,..

Apapa: Truck parks target free traffic despite challenges to electronic call-up

Since the February 27 implementation of the electronic call-up system for managing truck traffic into Apapa, port users, businesses and residents of the port city are yet to experience the expected ease of movement as trucks still park on the bridges and roads.

N15tr InfraCo Begins Full Operations in Q3 2021

The N15 trillion Infrastructural Corporation of Nigeria Limited (INFRACO), which the Central Bank of Nigeria, the African Finance Corporation (AFC), Nigeria Sovereign Investment Authority (NSIA) and others organisations are collaborating with the Federal Government to establish, will begin full operations in the Third Quarter of the year.

Vice President Yemi Osinbajo said upon its take-off, with the credibility of the listed promoters and the quantum of funds, the corporation will meet the infrastructural needs of the economy through Public Private Partnership (PPP).

Global Sukuk Market Growth to Continue in 2021 and Beyond

Sukuk supply is expected to rise in the second half of 2021 after it showed strong growth during 2Q21, supported by strong investor appetite and issuers’ refinancing and funding diversification needs, Fitch Ratings says. Seasonal patterns will affect quarterly sukuk issuance which, following the summer break, is expected to pick up in the remainder of 2021 and beyond.

The sukuk market experienced strong market activity in 2Q21 after a slower 1Q21, driven by big-ticket issuance from the Saudi Arabian Oil Company (the largest corporate sukuk issued to date) and the Indonesian, Turkish and Omani sovereigns. The growth was driven by issuers aiming to diversify their funding and taking advantage of the low interest-rate environment amid continued fiscal deficits and still-challenging economic conditions. Investor demand remains intact due to new sukuk supply scarcity and the global hunt for yield.

Global outstanding sukuk reached USD754.1 billion in 2Q21 (5% higher than 1Q21). Sukuk issuance with maturities of more than 18 months from the Gulf Cooperation Council region, Malaysia, Indonesia, Turkey and Pakistan rose by 136% qoq to reach USD23.4 billion in 2Q21, with sukuk share in the total funding mix jumping to 36% (1Q21: 15%). The volume of outstanding Fitch-rated sukuk reached USD131 billion, with 80% of issues being investment-grade.

Defaulted sukuk volumes remain small at 0.27% of gross sukuk issued to date, and include the 2021 sukuk default by PT Garuda Indonesia (unrated by Fitch). Legal precedents for effective enforcement are lacking in many sukuk-issuing jurisdictions. More sukuk defaults could emerge due to the economic volatility caused by the coronavirus pandemic and once governments withdraw their financial support. 

A number of recent international sukuk issuances contained new clauses and revised terms in the documents to comply with the sharia standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The changes aim to address the globally sizeable UAE-based sukuk investors, issuers and arrangers that are subject to AAOIFI compliance rules. These changes have credit implications that could affect issuers’ liquidity, credit profile and ratings. Further changes may be made in the future to comply with AAOIFI standards, which Fitch will assess.

Sukuk Risk Profiles Could Be Altered by AAOIFI-Compliance Push

Recent innovations in and revisions to sukuk documentation to comply with the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) sharia standards may have implications for sukuk holders’ ranking, and sukuk rateability, as well as the issuers’ credit profiles, liquidity and ratings, Fitch Ratings says.

Most sukuk are still structured in a way that creates an economic effect similar to conventional bonds, limiting the impact of the changes so far. Fitch adopts a case-by-case approach when rating sukuk and will monitor and report any credit impact in its public commentaries.

A number of recent international sukuk issuances contain new clauses and revised terms in their documentation to satisfy the requirements of the UAE Central Bank’s Higher Shariah Authority (HSA), which aims to increase the standardisation in the UAE sukuk market through the adoption of AAOIFI sharia standards.

Standardisation may be achieved in the medium-to-long term, but, in the near term, these changes are adding further complexity to an already complex instrument like sukuk. They are also affecting the global sukuk market, as a sizeable share of international sukuk investors, arrangers and issuers come under HSA’s remit and so are subject to AAOIFI sharia standards. Non-compliance could affect sukuk demand.

The changes include stricter tangibility ratio requirements with new dissolution triggers such as tangibility and delisting events and associated put options, as well as partial-loss events, changes in indemnity and in the definition of sharia. Further changes are possible in the future.

One of the key changes is the issuer’s obligation to monitor and maintain the tangibility ratio above 50% throughout the sukuk’s life, rather than typically at issuance. If the tangibility ratio falls below 33%, this could result in tangibility events, delisting events or the exercise of put options by investors. Such events, in turn, could reduce issuers’ liquidity and potentially affect their ratings if they have to redeem their certificates in whole or in part prior to the scheduled dissolution date at the dissolution distribution amount. Historically, a fall in the tangibility ratio below a certain threshold has not always caused a dissolution event and investors did not have an associated put option.

Indemnity clauses in some sukuk documentation have also been modified, with the exercise price payment to investors now subject to the obligor being in actual or constructive possession, custody or control of all or any part of the portfolio assets. On a standalone basis, this could result in sukuk subordination. However, so far, its impact has been neutralised by the insertion of counter-clauses obliging the issuer to maintain actual or constructive possession, custody or control of all or any part of the portfolio assets during the ownership period. Failure to do so will result in an obligor event.

GTCO: Guaranty Trust Holding Company Completes Corporate Re-organization

Aiming to strengthen its long-term competitiveness and growth prospects, Guaranty Trust Bank plc, has completed its re-organisation, to a Holding Company Structure. Under the terms of the re-organisation, a new operating company has been established. The corporate name of Guaranty Trust Holding Company Plc (GTCO) will be used by the newly established operating company.

Kindly be informed that as part of the restructuring process, the Board of GTCO was constituted and the Board of Guaranty Trust Bank Limited (GTBank) was reconstituted following the retirements of the following Directors:

  • Mrs. Osaretin Demuren (Chairman):
  • (ii) Mr. Adebayo Adeola (Non-Executive Director):
  • (iii) Mr. Demola Odeyemi (Executive Director};
  • (iv) Mr. Bolaji Lawal (Executive Director).

GTCO is also pleased to announce its new Board of Directors as well as changes to the Board of its banking subsidiary, GTBank. All the appointments have been approved by the Central Bank of Nigeria.

GTCO’s Board will comprise;

(i)     Mr. Sola Oyinlola ( Chairman)

(ii)    Mr. Segun Agbaje (Group Chief Executive Officer)

(iii     )Mrs. Cathy Echeozo ( Non-Executive Director)

(iv)   Mr. Suleiman Barau ( Independent Non-Executive Director)

(v)    Mrs. Helen Bouygues ( Independent Non-Executive Director)

(vi)   Mr. Adebanji Adeniyi ( Executive Director)

GTBank Board will comprise;

  • Mr. Ibrahim Hassan (Chairman)
  • Mrs. Miriam Olusanya (Managing Director)
  • Mr. Olabode Agusto (Non-Executive Director)
  • Ms. Imoni Akpoture ( Independent Non-Executive Director)
  • Mrs. Victoria Adefala ( Independent Non-Executive Director)
  • Mr. Jide Okuntola(Deputy Managing Director)
  • Mr. Haruna Musa( Executive Director)

Commenting on the completion of the Corporate Re-organisation, Mr. Segun Agbaje, the Group Chief Executive Officer of GTCO said: “We believe that a Holding Company Structure will allow us take advantage of new business opportunities in the emerging competitive landscape and strengthen our earnings base. We are very excited to get started on the next phase of our incredible journey to driving Africa’s growth by making end-to-end financial services easily accessible to every African and African Businesses by leveraging Technology and Strategic Partnerships. As a bank, we were always looking to meet every customer need; with our corporate re-organisation, we will be able to do more to help our customers thrive in this new world of digital technologies and unprecedented possibilities”.

Mr. Agbaje further stated that, “Whilst we are evolving as an organization, we remain committed to our founding values which have endeared our brand to millions of people across Africa and beyond, and which continues to drive our financial success. As a Proudly African and Truly International brand, we will continue to live by these values of excellence, hard work and integrity, even as we create faster, cheaper, safer and more diverse products for people and businesses of varied types and sizes.”

Prior to its corporate re-organisation to Guaranty Trust Holding Company Plc, Guaranty Trust Bank Plc has been at the forefront of delivering innovative banking products and services to customers and best-in-class Return-on-Equity to shareholders. It is widely regarded as the best managed financial institution in Nigeria and has over the past decade, embarked on a period of unparalleled growth, growing its customer base from less than 3 million customers in 2011 to over 24 million customers in 2020, and profit before tax from 45.5 billion at the end of the 2010 financial year to 8238.1 billion at the end of the 2020 financial year.

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First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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