News flash for the day

Banks’ private sector credit up 32.81% in 3yrs

Nigerian Deposit Money Banks (DMBs) gave out the most credit worth N33.84 trillion to the private sector in September 2021, driven by the loan policy of the Central Bank of Nigeria (CBN). This represents an increase of 32.81 percent compared with N25.48

How unstable FX shut down MallforAfrica

Africa-focused e-commerce platform, MallforAfrica has suspended its operations in Nigeria, which might lead to the company’s total shut down due to the unstable foreign exchange regime in the country. The naira has seen multiple devaluations since 2016

Higher insurance claims slow Lasaco’s 9-month profit by most in 3yrs

Underwriting firm, Lasaco Assurance Plc has reported its lowest nine-month profit in three years in 2021 on the back of a 94.22 percent jump in the claims paid between January and September 2021. The profit reported by the insurance company slowed by 46.79 percent.

COP26: Nigeria, 44 other nations commit to sustainable farming

Nigeria and 44 governments of other nations at the COP26 pledged to create a more sustainable agriculture and land use mechanism that is eco-friendly. The 45 nations and 95 businesses joined farmers and local communities last Saturday, 6th November 2021, at COP26 to pledge for urgent action and investment to.

Recent rainfall to boost Nigeria’s cocoa harvest

Recent rains in Nigeria may appear strange given the time of year, but experts now say the rains should improve and prolong the country’s cocoa harvest. The rainfall should boost the growth of cocoa crops in key growing regions and lead..

Reps summon FCT Minister over infrastructural decay in Abuja

The House of Representatives has summoned the Minister of the Federal Capital Territory (FCT) Muhamad Bello to appear before it and address lawmakers on the infrastructural decay in the nation’s capital. This resolution was sequel to the adoption of a motion of urgent public importance sponsored by Deputy.

Fitch Rates Fidelity Bank’s Senior Unsecured Notes ‘B-

Fitch Ratings has assigned Fidelity Bank PLC’s USD 400 million senior unsecured notes maturing October 2026 a Long-Term Rating of ‘B-‘ and a Recovery Rating (RR) of ‘RR4’, reflecting average recovery prospects.

Key Rating Drivers

Senior Unsecured Debt

The notes’ rating is aligned with Fidelity’s Long-Term Issuer Default Rating (IDR) of ‘B-‘, which captures Fitch’s view that the likelihood of default on these senior unsecured obligations reflects the likelihood of default of the bank.

The notes constitute direct, general, unconditional, unsubordinated obligations of Fidelity and will at all times rank pari passu, without preference among themselves, with all other unsecured and unsubordinated obligations. The proceeds will be used for general corporate purposes, including support the bank’s trade finance business.

Fidelity’s IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘. The VR reflects the concentration of its activities in and sensitivity to Nigeria’s challenging operating environment and is constrained by a moderate franchise, high credit concentrations, an aggressive growth appetite and asset quality pressures. These constraints are balanced against reasonable profitability, capitalisation and liquidity.

Rating Sensitivities

Factors that could, individually or collectively, lead to positive rating action/upgrade:

  • The notes’ rating would be upgraded if Fidelity’s Long-Term IDR was upgraded, which would require a strengthening of its franchise.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

  • The notes’ rating would be downgraded if Fidelity’s Long-Term IDR was downgraded. This may result from its impaired loans ratio rising above 10% and aggressive growth that results in very thin buffers over regulatory requirements or a sharp decline in its Fitch Core Capital ratio.

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of ‘3’. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity.

Inflation Maintained Its Declining Trend in September 2021 as Naira Depreciated on IEFX Window

Inflation continued its downtrend in September 2021. The headline index grew by 16.63% YoY in September 2021, 0.38% lower than 17.01% recorded in July 2021. Likewise, food inflation inched up by 19.57% YoY in September 2021, 0.73% lower than 20.30% recorded in August 2021. However, the core segment resumed its uptrend, rising by 13.74% YoY in September 2021, 0.33% higher than 13.41% recorded in August 2021. The drop in yearly headline inflation marks the sixth consecutive decline, following a 19-month uptrend that lasted from September 2019 till March 2021. The moderation in the headline index drew support from the sustained trend of disinflation in the food segment, while the core segment reversed the improvement seen last month as it nudged northwards in September. 

In September 2021, headline inflation rose by 1.15% MoM, representing a 0.13% increase from the rate of 1.02% that was recorded in the previous month. The yearly average rate rose to 16.83%, 0.23% greater than 16.60% recorded in the previous month. With both food and core sub-indexes still on the uptrend, monthly headline inflation continued to rise.

Fiscal and Monetary Policy Misalignment, Weakened Consumer Confidence in 2021 – Lampe Omoyele

Weakening consumer confidence in Nigeria has been attributed to the inability of fiscal and monetary policy authorities to align policies. Mr. Lampe Omoyele, the Managing Director, Nitro 121, made this point while discussing Consumer Confidence in Nigeria in 2021. 

AOW 2021: Sahara Group Advocates Measured Transition in Africa’s Upstream Sector

 A strong delegation from leading energy conglomerate Sahara Group will canvass the adoption of an “Africa appropriate” transition agenda in the continent’s upstream sector at the Africa Oil Week in Dubai, Executive Director, Moroti Adedoyin-Adeyinka has said. 

COVID-19 Impact on Treasury: Finance Minister, AGF to Engage State Officials

 Faced with the impact of the COVID-19 pandemic of the nation’s treasury, the Minister of Finance, Mrs. Zainab Ahmed and the Accountant-General of the Federation, Mr. Ahmed Idris, are to engage officials of state governments on how to resolve the revenue challenges that now confronts the nation. 

NAFEX Rate Appreciated by 0.69% WoW to N413.62 from N416.48

 In the FX Spot and Derivatives markets, the total turnover for the week-ended November 5, 2021, was $852.29 million, representing a decrease of 44.80% ($691.60 million) from $1,543.88 million reported for the week-ended October 29, 2021.

Bullish Momentum Resumes as Average Yield Declines 15bps WoW to 5.33%

Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market took a bullish turn as investors hunted for bargains across the curve. The week started on a quiet note, and maintained minimal trading activities, despite buoyant system liquidity (N68.4bn long as of Friday).

Notable Performances of Grains Amid Harvest – AFEX Commodities Weekly Report 051121

Cocoa had quite an impressive week for players on the Exchange, closing 4.18% higher at price to outperform other commodities on the Exchange. The AEI and ACI remain flat up until the 2021/2022 trading season.

AFEX Releases 2021 Crop Production Survey and Forecast Report

 The outbreak of the COVID-19 pandemic, among other effects, exposed the precarious state of food systems, especially in Africa. It became imperative for national governments to fix challenges across the agricultural value chain within their nation-states.

 NIPC Launches e-OSIC To Facilitate Investment Promotion in Nigeria

 As part of its mandate to coordinate and monitor all investment promotion activities in the country, the Nigerian Investment Promotion Commission (NIPC) recently announced the launch of the “e-OSIC” platform, the virtual platform of the “One Stop Investment Centre”

Cooking Gas Price Jumps by 240%, Marketers Halt Imports

Importers of Liquefied Petroleum Gas, popularly called cooking gas, have stopped importing the commodity. Investigations also show that the cost of the product increased by 240 per cent for 12.5kg, jumping from N3,000 to N10,200 between January and October. 

Nigeria’s October Oil Output Fell to 1.37 million bpd – Report

Nigeria’s crude oil production dropped to 1.37 million barrels per day last month from 1.39 million bpd, a survey by Platts showed on Monday. The country’s oil production in October was 261,000 bpd below the quota given to it by the Organization of the Petroleum Exporting Countries and its allies, according to the survey. 

 

NGX Reclassifies Okomu Oil Palm Plc from Medium Price Stock Group to High Price Stock Group

The investing public are hereby notified of the reclassification of Okomu Oil Palm Plc from the Medium-Priced Stock Group to the High-Priced Stock Group, in line with The NGX’s Pricing Methodology framework.

 Equity securities of Quoted Companies on The Exchange (NGX) are classified into three Stock Price Groups or Categories – High-Priced, Medium Priced, and Low-Priced Stocks, based on their market price. In this regard, securities must have traded for at least four out of the most recent six-month period within a Stock Price Group’s specified price band to be classified into the category. Accordingly, a review of Okomu Oil Palm Plc stock price and trade activities over the most recent six-month period provides the basis for reclassifying the security from the Medium-Priced Stock Group to the High-Priced Stock Group. This reclassification also necessitates the attendant change in the tick size change from N0.05 kobo to N0.10 kobo – in line with Rule 15.29: Pricing Methodology, Rulebook of The Exchange, 2015 (Trading License Holders’ Rules).

 Okomu Oil Palm Plc stock price appreciated above the N100 price level on June 8, 2021 and traded above N100 up till close of business on October 22, 2021. This indicates that Okomu Oil Palm Plc stock price has traded above N100 in at least 4 months out of the last 6 months.

 Resultantly, Okomu Oil Palm Plc has been reclassified from the Medium-Priced Stock Group to the High-Priced Stock Group with effect from Wednesday November 3, 2021.

About the Author

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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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