Oscar Onyema, chief executive officer of the Nigerian Stock Exchange (NSE), says corporates raised a total debt of N192 billion in 2020, leveraging the low yield environment to fund expansion objectives and pursue debt refinancing.
Speaking on Tuesday at a forum on 2020 market recap and 2021 outlook, Onyema said the federal government raised over N2.36 trillion from the capital market in 2020 — 92 per cent of bonds issued during the period.
A bond is an instrument of indebtedness of the bond issuer to the holders. When investors buy a bond, they are loaning money to the issuer in exchange for the repayment of that money plus interest.
“Capital-raising activities in the fixed income market increased significantly in 2020. The NSE’s bond market capitalization rose by 35.52% from N12.92 trillion in 2019 to N17.50 trillion,” he said.
“Continuing the trend in recent years, the Federal Government of Nigeria dominated issuances, raising over N2.36 trillion which comprised ~92% of total bond issuances.
“Corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.”
Recounting achievements recorded by the NSE in 2020, he noted that the NSE all share index (ASI) emerged the best performing index in the world among 93 global equity indices tracked by Bloomberg.
He also said that NG Clearing Limited received approval in principle from the Securities and Exchanges Commission (SEC) in 2020 to launch clearing and settlement of exchange traded derivative products as Nigeria’s premier Central Counterparty Clearing House (CCP), bringing the NSE closer to its goal of launching exchange traded derivatives.
He added that the exchange revised its trading fee charge on debt instruments to 0.0005% (N5 per million) to boost liquidity in the fixed income market.
Speaking on the outlook for 2021, Onyema said: “The year has started on a positive note as the ASI has already returned 2.0% 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.”
“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.”