NSE Bond Market Hits N17.50trn In 2020, Up 35.5%
The Chief executive officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, has disclosed that capital-raising activities in the fixed income market increased significantly in 2020, pooling over N2.36 trillion for federal government representing 92 per cent of total bond issuances for the year.
In the main, the NSE’s bond market capitalisation rose by 35.5 per cent from N12.92 trillion in 2019 to N17.50 trillion.
Speaking at the virtual 2020 Market Recap and 2021 Outlook on Tuesday, Onyema revealed that
Corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.
A breakdown of capital raised from the bond market shows that there was a historic listing of Interswitch’s N23 billion 15 per cent Fixed Rate Series 1 bond, the listing of Dangote Cement’s N100 billion 12.50 per cent Series 1 bond under its N300 billion bond programme which became the largest corporate bond issuance in Nigeria’s fixed income market and the listing of Primero Plc’s first bond on the NSE – the Primero BRT Securitization SPV Plc bond valued at N16.5 billion.
Presentations were made by Oscar Onyema and the Managing Director, Chief Economist, Africa and Middle East, Global Research, Standard Chartered Bank, Razia Khan, who provided insights into the global macroeconomic environment and the outlook and opportunities in the Nigerian capital market.
“The year 2020, according to Onyema was indeed a historic one for global capital markets that faced buffeting headwinds, sharp swings and steep losses but largely remained resilient and orderly amid rising uncertainty.
The Nigerian Exchange during this period, however, seen renewed investor optimism coupled with improved economic conditions and low fixed income yields propelled a year-end bull run. This is reflected in Bloomberg’s views which after tracking 93 global equity indices, the NSE All-Share Index (ASI) emerged as the best-performing index in the world, surpassing the S&P 500 +16.26 per cent, Dow Jones Industrial Index +7.25 per cent and other global and African market indexes, to post a one-year return of +50.03%.
This came as the Global Capital Market, pummeled by the outbreak of the novel coronavirus disease (Covid-19) and its rapid spread across the globe in the first quarter of the year that triggered panic selling by global investors.
According to the World Federation of Exchanges (WFE), global capital markets lost $18 trillion due to the pandemic over the course of February and March 2020 alone.
However, diverging from grim economic projections, global markets saw a rebound following the sharp drop in March, as many indicators recovered to pre-pandemic levels by June 2020, fuelled by extraordinary stimulus packages, monetary policy actions, and public health responses from world governments and economic actors.
On product performance, the Nigerian equities market got off to a strong start in 2020, returning 10.4 per cent by the eighth trading session. By October, the equities market entered a much awaited bull run.
Also buoyed by the formal declaration of the U.S president-elect, unattractive fixed income yields, and better-than-expected corporate earnings, the NSE ASI recovered from Q1’20, to close the year at 40,270.72 +50.03 per cent and erase losses of -14.90 per cent recorded in 2019.
During its remarkable year-end run, the ASI gained 6.23 per cent in a single trading session which triggered a 30-minute halt of trading on all stocks for the first time since the NSE Circuit Breaker was introduced in 2016 to safeguard market integrity in periods of extraordinary volatility.
“At the close of the year, the NSE’s equity market capitalization was up by 62.42 per cent, from N12.97 trillion in 2019 to N21.06 trillion in 2020 while market turnover saw an uptick of 7.25 per cent from N0.96Tn in 2019 to N1.03Tn in 2020, noted Onyema
Although Initial Public Offering activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37 per cent to N1.42 trillion, from N148.77 billion. Also noteworthy is that for the second consecutive year, equity market transactions were dominated by domestic investors who accounted for 65.28 per cent of market turnover by value (Retail: 44.98 per cent ; Institutional: 55.02 per cent ) while foreign portfolio investors accounted for 34.72 per cent.
The NSE Exchange Traded Fund (ETF) market experienced its best year yet. Market capitalization increased by 272.30% from N6.58 billion recorded in 2019 to N24.51 billion in 2020 while trade volumes increased by 218.23 per cent from 4.15 million units in 2019 to 13.20 million units in 2020, and turnover skyrocketed by 51,830.59 per cent .
These achievements are wrought by several factors including:
growing adoption of the asset class by investors and asset managers on the back of strong year on year growth.
On the outlook for 2021, Onyema said, “The year has started on a positive note as the ASI has already returned 2.0 per cent after 11 trading sessions.
“We expect the marginal reopening of businesses, normalization of the economy and revenue-diversification drive of the Nigerian government to elicit positive sentiments throughout the year, the bourse’s CEO started.
Our growth expectations should be noted with caution, as the recent second wave of COVID-19 in Nigeria and globally, may slow down renewed social and economic activities.”
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