Nigeria sells less bonds than planned to keep cost below inflation

Nigeria raised less money than it originally planned through a domestic bond auction on Wednesday after investors demanded higher yields to buy the debt, the Debt Management Office (DMO) said on Thursday.

Nigeria's debt office boss, Nwankwo

The DMO said it raised 105.32 billion naira ($335 mln) from the bond sale, 29.7 billion naira less than it wanted to raise. 

Traders said investors demanded yields of up to 17.55 percent on the notes but the debt office offered the bonds at yields below 17 percent on an improving inflationary outlook in Africa's biggest economy.
On Thursday, the statistics office said Nigeria's inflation rate eased for the second consecutive month in March to 17.26 percent, down from 17.78 percent in February, which was the first drop in 15 months.
The DMO offered a fresh 20-year bond at par at 16.24 percent coupon to raise 56.25 billion naira. It sold a 10-year debt of 34.04 billion naira at 16.24 percent as against 16.28 percent at its previous sale.
The debt office raised 15.03 billion naira via a five-year debt at 15.98 percent compared with 16.24 percent previously.
The government has been selling bonds below inflation in recent months to keep a lid on debt service cost as it aims to finance half of its 2.36 trillion naira ($7.50 bln) budget deficit for 2017 through the domestic debt market.
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Nigeria's Dangote Flour returns to profitability, posts 12 bln naira profit

Nigeria's Dangote Flour Mills has returned to profitability after posting losses for a consecutive four years, the company said in a release on Thursday.

The company posted a profit before tax of 11.82 billion naira for its 2016 financial year.

A review of the results indicated that the group's operating profit went up to 16 billion naira, compared to a loss of 8.6 billion naira posted the previous year. Profit after tax rose to 10.6 billion naira in contrast to a loss of 12.5 billion naira in 2015.

Revenue went up by 120 percent from 48 billion naira to 105 billion naira, while gross profit increased by 556.8 percent to 29 billion naira, compared to 4 billion naira in 2016. 

Capital market analysts described the company's performance as heartwarming given that the company had recorded losses in the past.
Dangote Flour Mills consist of Dangote Flour, Dangote Pasta, and Dangote Noodles. It was sold to Tiger Branded Consumer Goods, a South African firm, but later reacquired and re-positioned for good results.
Having reacquired the flour mills, the new board of directors and management started a restructuring process.
Speaking on the repositioning, the chairman, Dangote Flour Mills, Ighodalo Asue, said, 'We bought back Dangote Flour Mill from Tiger Branded Consumer Goods and by this move, it means we have a stronger, better, sophisticated and more focused Dangote Flour Mills.
'Since the takeover, we have taken a lot of steps to reposition the company through expansion to drive growth. We are also using this medium to restate our commitment to increasing our shareholders.'
The group chief executive officer, Dangote Flour Mills, Thabo Mabe, attributed the return to profitability to several strategies adopted by the company to increase market share and create value for shareholders.
He noted that the Dangote Flour Mills was driven by the vision of putting its products on the table of every Nigerian.

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Nigeria inflation falls in March on FX supply, stats office says

Nigeria's chief statistician, Kale

Annual inflation in Nigeria fell for a second straight month in March, showing the early effects of central bank intervention on the currency market to meet demand for dollars, the statistics office said on Thursday.
Inflation declined to 17.26 percent in March, the National Bureau of Statistics (NBS) said in a report, down from 17.78 percent in February, which was the first drop in 15 months
A Reuters poll of economists had predicted a decline to 16.70 percent.
General price levels in Africa's biggest economy rose for the 12th straight month in January to its highest level in more than 11 years, as the West African nation battled an economic recession, a currency crisis and dollar shortages, brought on by low oil prices, its mainstay.
The NBS said the second consecutive month of a decline in the headline rate represented "the effects of stabilizing prices in already high food and non-food prices".
"It is also indicative of early effects of a strengthened naira in the foreign exchange rate market," it said.
The central bank has sold over $4 billion on the forward currency market since February in an attempt to improve dollar liquidity and narrow the spread between the official and the black market exchange rates. Black market rates have fallen as a shortage of dollars caused the naira to plummet.
A separate index showed food inflation at 18.44 percent in March from 18.53 percent in February, it said.
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South Africa's Shoprite looks beyond Africa to Eastern Europe

Africa's biggest grocery retailer Shoprite is considering a push into South America and Eastern Europe, where it will leverage off its former suitor Steinhoff International which already has operations in the region, its new CEO told Reuters.
The move signals a change in strategy for Shoprite under Chief Executive Pieter Engelbrecht, 47, as sovereign rating downgrades and a weak economy cloud prospects at home. It also leads it down a fiercely competitive path crowded with established retail giants such as Tesco, Carrefour, Lidl .ULand Aldi.
Engelbrecht, who took over from 37-year veteran Whitey Basson in January, said the company wants to enter markets in Eastern Europe that either "have low competition or high economic growth."
"We will look at other developing countries. That is also something that came out with our Steinhoff discussions and they've got good presence there, so we would like to leverage off that knowledge and definitely have a look at the East Bloc countries," he said in an interview at the company's head office in Brackenfell about 20 kilometres from Cape Town.
Steinhoff in February called of a plan to merge its African clothing and furniture assets with Shoprite's stores, a deal bankers had said could create a giant valued at more than 180 billion rand.

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Shell says it knew some payments for Nigeria oilfield would go to Malabu

Royal Dutch Shell has said it knew that some of the payments it made to Nigeria for the rights to an oilfield would go to Malabu Oil and Gas, a company associated with a former Nigerian oil minister and convicted money launderer. 
Shell spokesman Andy Norman said the group had known the Nigerian government "would compensate Malabu to settle its claim on the block". Shell previously had said only that its payments from the 2011 deal went to the Nigerian government.
In an email to Reuters, Norman said that while Shell knew that former oil minister Dan Etete was "involved" with Malabu, it had not confirmed that he controlled the company.
Etete was convicted of money laundering in a separate case in France in 2007.
Attempts by Reuters to contact Etete have been unsuccessful.
"Over time it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not," Norman said.
Norman added that the company believes the settlement was a fully legal transaction with the Nigerian government.
The statement comes amid mounting pressure over the deal, in which Shell and Italy's Eni  paid $1.3 billion for the rights to offshore block OPL 245, which industry estimates say could hold more than 9 billion barrels of oil.
Courts in Nigeria and Italy are investigating the purchase of the block. Italian prosecutors have asked for Eni chief Claudio Descalzi to be sent to trial in correction with the case. Eni has said neither the company nor Descalzi were involved in any allegedly illicit conduct.
A Nigerian court ordered the asset temporarily seized in January at the request of the country's Economic and Financial Crimes Commission, but the move was overturned.
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Nigeria shortens FX settlement period as naira weakens

 Nigeria's central bank plans to sell shorter-dated dollar forwards to inject liquidity into the official market and try to support the naira, traders said on Monday.
The local currency has weakened on both the official and black markets despite a series of interventions. The naira fell to 328.50 on the official market on Monday with only $80,000 traded. It slid past 400 naira on the black market. 
"In the weeks ahead the (central bank) will sustain its intervention," spokesman Isaac Okorafor said in a statement.
"The bank will sell short-tenured forwards ... to meet the demand of manufacturers and all other foreign exchange users," he said, adding that the bank was striving to achieve exchange rate stability.
On Monday, traders said the bank will auction $100 million to be settled between one week and 30 days, as against sixty-day contracts it had written previously.
The bank auctioned $418 million at 310 naira on Friday to airlines, agricultural firms, petroleum and raw material importers in addition to $350 million it sold last week to individuals with certain foreign expenses, it said.
Nigeria is battling a currency crisis brought on by low oil prices, which has tipped its economy into a recession, hammered its dollar reserves and created chronic dollar shortages, frustrating businesses, and individuals.
It now has at least five exchange rates -- the official one, the black market, a rate for Muslim pilgrims going to Saudi Arabia, a retail rate set by licensed exchange bureaux and a rate for foreign travel, school, and medical fees.
The multiple exchange policy has masked the pressure the currency is under and made it difficult to attract inflows as investors struggle to price naira assets, analysts say.
The central bank, opposed to a free naira float, has been selling the U.S. currency on the official currency market to try to narrow the spread between the black market rate after the black market rate hit a record high of 520 in February.
It has since devalued the naira for consumers to 375 and has been intervening selling more than $1 billion in forward currency sales since February.
Last week the International Monetary Fund (IMF) said the naira was overvalued by around 10 to 20 percent and called for changes to Nigeria's exchange rate policy.

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Nigeria naira slides past 400 per dollar on black market -traders

Nigeria's naira slid pass 400 on the black market on Friday amid tight dollar supply, despite a series of currency forwards sold by the central bank this month to clear demand for the U.S. currency on the official market, traders said.
The naira was quoted at 405 per dollar on the black market on Friday. It traded at 306.15 on the official market.
The central bank has sold more than $1 billion on the forward market since February. It auctioned $250 million in forward sales this week to boost liquidity and also intervened on the spot market.
Traders said the forward sales have improved liquidity but left the spot market inactive, leaving importers that want hard currency for immediate use reliant on the black market.
Africa's biggest economy is facing a currency crisis brought on by low oil prices, which has hammered its foreign reserves and created chronic dollar shortages, frustrating businesses and individuals.
The central bank has been intervening on the official market this year to try to narrow the currency gap with the black market rate, which hit 520 to the dollar in February, prompting the bank to devalue the naira for consumers to 375.
February's partial devaluation created multiple exchange rates, making it difficult to attract inflows as investors struggle to price naira assets, analysts say.
On Wednesday the International Monetary Fund (IMF) said the naira was over-valued by around 10 to 20 percent, and called for changes to exchange rate policy.

(C) Reuters News

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