Friday, May 24, 2024

Bonds trade drags but Equities saved the day at BSE

The local stock exchange – BSE recorded a total turnover of approximately P4.5 billion during in 2021 compared to P3.6 billion in 2020, according to the bourse’s latest market update report. The two figures reflect an increase of 26.3 percent from the previous year. The 2021 turnover is on account of a 160 percent increase in equity turnover relative to 2020 primarily due to the acquisition of a majority stake of 78.15 percent in BancABC Botswana by Access Bank Plc, a Nigerian-listed Bank with international footprint.

In April 2021, Access Bank Plc, Atlas Mara and ABCH announced an agreement for Access Bank Plc to acquire the full 78.15 percent shareholding of ABCH in BancABC Botswana. Since the announcement, all parties have been working to close the transaction fully and BancABC to start trading as a subsidiary of Access Bank Plc.

Access Bank is classified as one of the largest banks in Nigeria and one of Africa’s leading banks by customer base. The bank boasts of a vast network of more than 600 branches and service outlets, spanning across three continents, in over 10 countries. The value of the BancABC-Access transaction reached approximately P1.1 billion.

Meanwhile the BSE report shows that Bonds recorded a decline of 6.5 percent in turnover while ETFs trading was down by 3.7 percent in 2021. In July 2021 the country’s Treasury said it was planning to finance the country’s expenditure through domestic borrowing using bonds but the response from investors has been lukewarm and expensive for over two years now.

In 2020 parliament approved request by the Treasury to increase the government bond issuance programme from P15 billion to P30 billion at its August sitting. The expanded bond programme was intended for two objectives; to primarily develop the capital market while acting as an alternative source of government financing, given the emergence of structural budget deficits, which totalled P21 billion since 2017.

Since the government through the central bank increased the number of government bond auctions, making them monthly, the government has failed to raise the amount of money it required at the time. In May 2021, the central bank sought to garner P1.93 billion, but ended up raising P1 billion, with long term bonds shunned for the short-term treasury bonds that had maturity of less than six months. In 2021, the Government through the BoB issued a new bond – the BOTSGB0527 at an initial nominal value of P175 million. The BOTSGB0527 bond is a 6-year bond maturing in May 2027 and pays a fixed coupon rate of 5.5 percent which is paid semi-annually. The BSE report shows that through the monthly auctions, BoB continued to issue additional tranches of the new and existing bonds, helping 8 Government raise a total of P2.7 billion in the domestic bond market. This is lower than the record amount of P5.2 billion raised in 2020.


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