Comercio Partners Research Financial Market

Financial Markets Week-end Summary – June 21, 2024

1 month ago
4 mins read

Ghana Moves To Restructure $13 billion International Debt

Ghana has tentatively agreed with bondholders to restructure $13 billion of international debt. Ghana began formal talks with bondholders in March, but negotiations stalled in April when the proposed deal did not meet IMF debt sustainability requirements. Bondholders will face a principal reduction of up to 37% and extended bond maturities. This follows a recent agreement with official creditors. Ghana’s dollar bonds surged, with the 2027 bond reaching its highest price since 2022.The country defaulted on most of its $30 billion international debt in 2022 due to economic strains from the COVID-19 pandemic, the Ukraine war, and rising global interest rates. Ghana and Zambia, another African defaulter, joined the G20’s ‘Common Framework’ for debt restructuring, including China in the process. Ghana’s restructuring announcement is expected soon, possibly by Friday. The finance ministry and the Paris Club have not commented.

Nigeria’s Total Debt Surges To N121.67 trillion, Approximately $91.46 billion

As of March 31, 2024, Nigeria’s total public debt has surged to N121.67 trillion (approximately $91.46 billion), marking a significant rise from N97.34 trillion (approximately $108.23 billion) on December 31, 2023. This represents a 24.99% increase, driven primarily by naira devaluation, although the debt decreased by $16.77 billion or 18.34% in dollar terms. The debt includes both domestic and external obligations of the Federal Government of Nigeria, thirty-six state governments, and the Federal Capital Territory. Domestic debt constitutes 53.96% of the total, amounting to N65.65 trillion (approximately $46.29 billion), while external debt stands at N56.02 trillion (approximately $42.12 billion). Excluding naira exchange rate movements, domestic debt increased by N6.53 trillion or 11.05% from December 2023 to March 2024. This rise is attributed to new borrowings for the 2024 budget deficit and the securitization of a portion of the N7.3 trillion Ways and Means Advances at the Central Bank of Nigeria.

WTTC Reports Robust Recovery For Egypt’s Tourism Sector In 2023

The World Travel & Tourism Council (WTTC) reports a robust recovery for Egypt’s tourism sector in 2023, with its GDP contribution surging by nearly 24% to E£953 billion, surpassing previous records by 21%. This growth extends to job creation and visitor spending, both exceeding pre-pandemic levels. Domestic spending increased by 9% to E£328.5 billion, and international visitor spending jumped 38.5% to E£470.4 billion. Employment in the sector rose by nearly 10% to over 2.5 million jobs, though it has not yet reached the 2008 peak of 3.7 million jobs. WTTC President & CEO Julia Simpson commended the sector’s resilience and the Egyptian government’s investment prioritization. Looking ahead, the WTTC forecasts continued growth, with the sector’s GDP contribution expected to reach E£988 billion in 2024, accounting for 8.1% of the economy. International visitor spending is projected to increase by 6.2% to nearly E£500 billion, and domestic spending is anticipated to rise above E£340 billion. Employment is expected to grow by 5.7% to 2.67 million jobs.

Money Market Update

Market liquidity opened the day in a credit of ₦707.76 billion. Week-on-week, the Open Buy Back (OBB) rate and the Overnight (OVN) rate declined by 38bps and 21bps to 25.25% and 26.04%, respectively.

According to Comercio Partners, rates are expected to hover around current levels.

Treasury Bills Market Update: Expect A Calm Start As Focus Shifts To the Bond Auction

The Treasury Bills market kicked off on a calm note with demand skewed to the 5-June-2025 bill quoted at 20.35/20.15. During the week, the CBN issued an OMO auction notice offering ₦500 billion across the standard tenors. While total subscriptions stood at ₦986.88 billion, same amount was sold. There was no sale on the 90-day bill while rates on the 188-Day and 363-Day bills closed at 19.48% and 22.299%, accordingly. Sequel to the auction, we saw the newly issued 17-June-25 bill largely offered with trades consummated at 22%. In addition, we saw some interest on the short end of the curve, particularly the July bills which traded at 19.40%. Today, the CBN issued another OMO auction notice offering ₦500 billion across the standard tenors. However, there was no sale.  Week-on-week, the average benchmark yield lost 3bps to close at 21.77%.

We expect a calm start as focus shifts to the bond auction.

FGN Bond Market Maintains Quiet Trend

The FGN local bond Market maintained the quiet trend with minimal activity on the 2031 bond bid at 20.00% and offered at 19.90%. In addition, we saw trades executed on the new 2033 bond and the off the run 29-year bond at 19.95% and 17.45%, respectively. In today’s session, we saw improved offers on the 33s ahead of the bond auction on Monday at 19.98% while bids were at 20.05%. Week-on-week, the average benchmark yield rose 5bps to 18.68%.

We expect a calm session as investors wait on the outcome of the auction.

FGN Eurobond Market Also Traded On Calm Note

The FGN Eurobond market traded on a calm note due to the United States Holiday. The FGN Eurobond market sustained the bearish sentiments despite the Initial Jobless Claims printing higher at 238K vs 235K expected. Furthermore, the S&P Global Manufacturing PMI printed at 51.7 vs 51 consensus while the Services PMI printed at 55.1 below expectations of 53.7 and 54.8 prior. Week-on-week, the average benchmark yields gained 24bps, settling at 9.99%.

We expect a bearish start to the week.

Currency Market: Naira to Dollar

The value of the Naira to the dollar depreciated by 0.19% to print at ₦1485.53/$ this week at the Nigerian Autonomous Foreign Exchange Market Window.

Equities Market: FBNH (-3.42%), GTCO (-2.00%), ZENITHBANK (-0.14%), Diluted  Gains In UCAP (+5.58%)

The local stock exchange concluded the trading day on a gloomy note, with the benchmark All-Share Index (ASI) dipping 10bps day-on-day and 18bps week-on-week to settle at 99,743.05points, bringing the year-to-date return to 33.39%. Today’s negative performance was driven by declines in the banks, particularly FBNH (-3.42%), GTCO (-2.00%), and ZENITHBANK (-0.14%), which diluted the gains in UCAP (+5.58%). Consequently, market capitalization saw a decrease of ₦0.06 trillion to ₦56.43 trillion. Despite this, the market breadth was positive at 2.17x, as 52 gainers outweighed 24 decliners.

On a weekly perspective, both volume and value of trades witnessed an uptrend, increasing by 94.03% and 129.21% to 617.22 million units and ₦11.35 billion, respectively. Within the weekly volume leaderboard, FIDELITYBK led with 1.25 billion units traded, followed by FBNH at 1.09 billion units and VERITASKAP at 135.73 million units. In terms of trade value, FBNH emerged as the top equity with transactions totaling ₦23.84 billion, with FIDELITYBK and GTCO trailing at ₦13.44 billion and ₦3.35 billion, respectively.

 

We expect a calm session.


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