ARMF Bond W/H: Create Your Fixed e-Savings Acct(s) At Interest Rate(s) >6% p.a….dd. 14/2/2020

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It has been >3 months since CBN banned local non-commercial banking investors from participating in it’s OMO bills primary & secondary market operations (except for foreign investors & local commercial banks) which has caused average yield to fall <6% p.a. At the moment, we are seeing strong investors’ resistance to these low yields and we fear the ”MMM” effect will take hold of the savings & investments market in the short-term with a lot of non-licensed fintechs promising very high returns for investments in specific sectors esp. in agriculture.

We continue to recommend FGN Treasury, Savings & Infrastructure (Sukuk/Green) Bonds on the NGSE/FMDQ exchanges as a better & safer alternative fixed income option that can provide local non-commercial banking investors higher yields than FGN T-bills and also similar yields to those obtained in the short-end CBN OMO-bills market on a long-term basis.

N.B: Your fixed e-savings account on the NGSE is actually Your CSCS Account which is directly connected to CBN S4 Platform (for safe-keeping).

The bond market remains bullish since 4Q2019 as rates continue to fall. We will try to execute clients’ purchase/sales order mandates on FGN bonds at near the last e-o-wk (end of week) market rates as shown below:

Bond                   Tenor (Years)         Current Market Yield (%)       Q’ty In W/H (=N= in MLN)

2021                                  1                                    6.86                                             100

2022                                   2                                   7.54

2023                                   3                                   9.06

2024                                   4                                   9.46

2025                                   5                                   9.73

2026                                   6                                  10.00

2027                                   7                                  10.39

2028                                   8                                  10.76

2029                                   9                                  10.82

2030                                  10                                 10.88

2034                                  14                                 11.13

2036                                  16                                 11.15

2037                                  17                                 11.03

2049                                  29                                 12.32

N.B: A Typical FGN Savings Bond is a ”revolving” 90-day FGN Treasury Bill.

Standard fixed e-savings acct opening starts at min. N10,000 where your CSCS acct acts as your e-custodian & e-savings account within the CBN S4 platform. Under the savings product –  Upfront Interest Savings Scheme which starts at min. savings order of N100,000.00 – only FGN bonds with coupon >6% p.a qualify to be allocated to bond clients.

FAQ:

• What is the effective yield of a FGN bond under the upfront interest savings scheme? – it is calculated by deducting the sum of transaction charges and/or upfront funding expenses from the total yield till maturity (excl. compounding opportunity) and divided by the holding period, for example, purchased at ‘par’ NIGTB 14.2% 14-MAR-2024 (FG112024S1) and held for 5-yrs to maturity => estimated effective yield of 12.6% p.a
• What is the current 91-day FGN T-bill PMA rate ? – 3.00% p.a
• What is the current commercial banks av. savings deposit rate according to CBN ? – 3.89% p.a
• What will be the increment to the bond’s effective rate under the upfront interest savings scheme if the quarterly upfront interest(s) were compounded (re-invested) in 12-month TTM FGN bonds with coupon >7% for example? –  we estimate an increment of 0.583% p.a on the respective FGN bonds’ effective rate. Thus, compounding is an investment strategy that should never be ignored !!!
• Must i have a CSCS trading acct with TRW Stockbrokers Limited to participate? – YES !!!

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ARMF Bond Portfolio has opened a new sub-product called ”collaterized security margin trading” which is accessible only to bond investors under the Upfront Interest Savings Scheme starting from a min. fixed savings of N1MLN @ margin loan rate of 0.0822% per day (pro rata).

Thus, savers can now leverage on their bonds (fixed e-savings) under the upfront interest savings scheme to obtain fresh cash to invest on the NGSE equity market. A N1MLN fixed e-savings will gain access to an equivalent N1MLN margin loan => N2MLN margin account => leverage ratio (asset/equity) of 200% (2:1).

Margin Loan Window: Open

Marginable Equity  Securities: AFRIPRUD, UACN, FLOURMILL, UBA, VITAFOAM

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ARMF Bond portfolio re-opens its sourcing for funds upto N500MLN (buy-side investors) to be used for the following:

• to finance upfront quarterly interest payments to bond savers under the upfront interest savings scheme;
• to finance collaterized margin loans to bond savers who want to leverage on their bonds (fixed e-savings) under the upfront interest savings scheme in order to obtain fresh cash to invest on the NGSE equity market;
• participation starts from min. N50MLN at a ”negotiated” annual fixed interest rate for a 12-month revolving holding period.

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ARMF Bond Portfolio upfront funding & margin loan rate(s) were reduced from 40% p.a to 30% p.a starting 1st January-2020 due to the local falling lending rate environment.
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Caution – selling bonds on the secondary bond market before maturity, can either incur capital loss or capital gain !!!!

Should you require further information on how to get the best (and/or highest) annual interest on Your savings, please contact directly:

Contact Person: Ekwueme Mike Anyadibe

Mobile: 08066564748

E-mail: ekwueme.anyadibe@trw-stockbrokers.com or respartner@live.com

Skype #ID: respartner

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TRW Stockbrokers Limited
Corporate Office: 62/64 Campbell Street (Kajola House)
4th Floor Lagos Island Lagos .
234-1-7646689,234-1-2710224-5
Email: info@trw-stockbrokers.com
website: http://www.trw-stockbrokers.com

Invest in FGN Monthly Bond Auction – February 2020…

By DMO,

The Central Bank of Nigeria on the authority of The Debt Management Office on behalf of the Federal Government Of Nigeria Offers for Subscription by Auction and is authorized to receive applications for

N45,000,000,000 – 12.75% FGN APR 2023 (5-Yr Re-opening)*

N45,000,000,000 – 14.55% FGN APR 2029 (10-Yr Re-opening)*

N50,000,000,000 – 14.80% FGN APR 2049 (30-Yr Re-opening)*

Auction Date: February 19, 2020

Settlement Date: February 21, 2020

SUMMARY OF THE OFFER

ISSUER: Federal Government of Nigeria (“FGN”)

UNITS OF SALE: N1,000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter

INTEREST RATE: For Re-openings of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument

INTEREST PAYMENT: Payable semi-annually

REDEMPTION: Bullet repayment on the maturity date

STATUS:

1. Qualifies as securities in which trustees can invest under the Trustee Investment Act

2. Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds amongst other investors

3. Listed on the Nigerian Stock Exchange

4. All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks

SECURITY: FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria

February 2020 FGN Bond Offer Circular

FGNBondTederForm (2)

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Min. unit aggregated subscription per retail investor under TRW Stockbrokers Limited for participation in the bond tender is  N1,000,000 and in multiples of N1,000.00

TRW Stockbrokers Ltd will transfer retail investors’ purchased FGN treasury bonds from FMDQ via the CBN S4 platform by cross-deal on the bond trading section of NGSE to their respective CSCS Accounts.

 

CBN Publishes Q4 2019 Economic Report

By CBN,

The Bank maintained the monetary policy rate at 13.50 per cent in the period under review. Broad money supply (M3), on quarter-on-quarter basis, grew by 4.1 per cent to N36,478.13 billion at end-November 2019, compared with 0.4 per cent and 8.1 per cent increase at the end of third quarter 2019 and fourth quarter of 2018, respectively. The development reflected, wholly the 2.0 per cent increase in net foreign assets, which more than offset the 1.2 and 10.6 per cent decline in net domestic credit and other assets (net) of the banking system, respectively. Over the level at end-December 2018, broad money supply (M3) grew by 9.3 per cent at end-November 2019, compared with the growth of 5.1 and 16.4 per cent at end of third quarter 2019 and fourth quarter of 2018, respectively.

The growth in (M3) reflected, wholly, the 28.8 per cent increase in domestic credit (net), which more than offset the 22.8 per cent and 4.9 per cent decline in net foreign assets and other assets (net) of the banking system, respectively. Narrow money supply (M1), on quarter-on-quarter basis, fell by 1.7 per cent to N10,930.57 at end-November 2019, compared with the decline of 0.4 per cent at the end of third quarter 2019.

Developments in banks’ deposit rates were mixed, while lending rates trended downwards in the fourth quarter of 2019. With the exception of the average savings and 7 days deposit rates, which rose from 3.69 per cent and 3.23 per cent to 3.93 per cent and 3.30 per cent, respectively, all other deposit rates of various maturities, fell from a range of 8.23 – 10.29 per cent at end-September 2019 to a range of 7.93 – 9.92 per cent at end-December 2019. The average term deposit rate fell by 0.29 percentage point to 8.07 per cent at the end of the review quarter.

The weighted average prime lending and maximum lending rates fell by 0.35 percentage point and 1.2 percentage point to 14.99 per cent and 29.98 per cent at end-December 2019. Consequently, the spread between the weighted average term deposit and maximum lending rates narrowed by 0.91 percentage point to 21.91 percentage points at the end of the review quarter. Similarly, the margin between the average savings and maximum lending rates narrowed by 1.44 percentage point to 26.05 percentage points at end-December 2019.

The total value of money market assets outstanding in the fourth quarter of 2019 stood at N12.76 billion, showing an increase of 2.6 per cent, compared with the increase of 2.9 per cent at the end of the third quarter of 2019. The development was attributed, largely, to the 3.1 per cent increase in FGN Bonds outstanding during the review quarter. Developments on the Nigerian Stock Exchange (NGSE) were bearish.

Federally collected revenue in the fourth quarter of 2019, fell below both the provisional quarterly budget and receipts in the preceding quarter by 30.8 and 10.6 per cent, respectively. The development, was due, largely, to the shortfalls in receipts from both oil and non-oil revenue components in the review quarter.

Provisional Federal Government retained revenue in the review quarter was N938.72 billion, while total estimated expenditure amounted to N2,074.46 billion, resulting in an estimated deficit of N1,135.74 billion.

Agricultural activities in the review quarter were dominated by the harvest of cash and root crops. In the livestock sub-sector farmers engaged in the fattening of cattle and stocking of poultry in anticipation of the end of the year sales. The end-period headline inflation, on year-on-year basis for the fourth quarter of 2019, stood at 11.98 per cent.

Foreign exchange inflow, through the CBN, rose by 6.1 per cent, while outflow fell by 3.9 per cent, relative to their levels in the third quarter of 2019. Total non-oil export proceeds received by banks fell by 37.8 per cent, compared with the level at the end of third quarter 2019. The average naira exchange rate vis-Ã -vis the US dollar depreciated at the inter-bank, BDC segment, and the I&E Window. The average exchange rate at the ‘Investors’ and ‘Exporters’ window, the BDC and the Inter-bank segments of the market were N362.83/US$, N359.42/US$ and N306.95/US$, respectively, in the review quarter. At US$38.07 billion, the gross external reserves fell by 6.4 per cent, compared with the level at end of third quarter 2019.

World crude oil demand and supply were estimated at 100.95 mbd and 99.32 mbd, respectively, in the fourth quarter of 2019, compared with 100.63 mbd and 99.26 mbd demanded and supplied in the third quarter of 2019. Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.92 mbd in the review quarter, compared with 1.91 mbd in the preceding quarter. The average price of Nigeria’s reference crude, the Bonny Light (370 API), was US$64.87 per barrel in the fourth quarter of 2019, compared with US$64.25 per barrel in the third quarter of 2019. Movement in oil prices were driven, mainly, by optimism of a trade agreement between the US and China, as well as the improved outlook for global oil demand amid better-than-expected economic performance of some major economies in the review period.

Major international developments and meetings of importance to the domestic economy in the review quarter included: The meeting of the Ministers of Finance and Central Bank Governors Presidential Task Force on the ECOWAS Single Currency took place in Abuja, and a team from Moody’s Ratings Agency visited the CBN on November 7, 2019, as part of Nigeria’s 2019 Review of Sovereign Credit Rating Exercise from November 5 – 8, 2019.

13198-CBN ECONOMIC REPORT FOURTH QUARTER 2019 Final-proshare

NGSE WEEKLY STOCK MARKET REPORT FOR FEBRUARY 14TH 2020

By NGSE,

Weekly Market Report for the Week Ended 14-02-2020

NIGERIAN BREWERIES PLC – DIVIDEND INFORMATION

NSE Pricelist for Feb 14, 2020

TRW_STOCKBROKERS_stxpricemove_d_all-2020-02-14 14_46_42.801

FG to limit number of SIM cards Nigerians can have, link them with national ID card, BVN

By The Eagle Online – February 14, 2020

The Minister of Communications and Digital Economy, Dr. Isa Pantami, has called on the newly inaugurated Board of the Nigerian Communications Commission to link sim card registration to national Identification Card and Bank Verification Number.
Pantami, who made the call at the inauguration, which held at the ministry’s headquarters on Thursday in Abuja, said it was an important step to take as it was part of the policy of the present administration.

He said: “Try to see how our sim registration will be linked up to our national identification card.
“It is also very important so that our BVN will all be linked up with our digital ID.
“The policy is with regard to our achievement on handling 9.4 million sim cards.
“Some are partially registered, some not completely registered.
“After that, President Muhammadu Buhari directed me to share that information with security agencies and also ask for their opinion on how to consolidate that achievement.
“As part of what they have sent to us, some responded that there are issues that we must address.
“One of them is total number of registered sim cards that each Nigerian should be allowed to have without difficulty.”
Pantami further suggested that every individual should possibly have three sim cards as regards the policy sent to the NCC as part of regulation to the board.
The minister advised that when individuals would need additional sim cards from the agreed number, they should provide justification in order to acquire more than the agreed number.
He said: “In the document policy we have sent, we say possibly three, as part of regulation.
“We said possibly,
“Possibly is not final.
“So it is flexible.
“This is based on what the Minister of Defence has sent to us.”
Pantami urged the board members to work hard and not to take their work lightly.
In his remarks, the Board Chairman, Prof. Adeolu Akande, expressed happiness and gratitude for the opportunity and support to be of service to the commission.
Akande, who spoke on behalf of the newly-inaugurated board, promised on behalf of the board and management of NCC to meet up and exceed the minister’s expectations.
He thanked the minister for standing by them during their screening in the National Assembly.
The Executive Vice Chairman of NCC, Prof. Umaru Danbatta, thanked the minister for giving a full compliment to NCC’s governing board.
Danbatta wished the newly inaugurated board success in the discharge of their duties

FDC ECONOMIC MONTHLY PUBLICATION – FEBRUARY 13, 2020….

By FDC Research,

Oil Discovered in Nigerian North East Basin

The Minister of State for Petroleum has disclosed the finding of one billion barrels of oil reserves in North-Eastern Nigeria. It is noteworthy that Chad and Cameron, nations in the same basin have combined oil reserves of approximately 1.7 billion barrels. This discovery could mean that the area may be classified as a potentially prolific oil-producing region in West Africa.

CBN restricts forex access for import of milk & dairy products

In continuation of its policy of import substitution and forex intervention, the CBN has increased the list of items prohibited from accessing the foreign exchange market. The latest additions are milk and other dairy products. It is estimated that these account for approximately $1.2bn of Nigeria’s import bill. The difference between prior restrictions and this is that six major corporates have been allowed to import these items. The privilege is because the companies have demonstrated a commitment towards backward integration and have a huge workforce.

OPEC cuts production limits

In the last four weeks, the growing menace and contagion of Covid-19 has rattled global markets. Fears of a slowdown in China’s growth and oil demand prompted the OPEC Technical Committee to call for additional output cuts of 600,000 barrels per day. This will bring the total production cuts to 2.3mbpd. It is therefore possible that Nigeria’s current quota of 1.7mbpd could be reduced. This will have a negative impact on the country’s fiscal and forex revenues.

In this edition of the FDC monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large…..FDC-Economic-January-Monthly-Update-February-13-2020