The Association of Issuing Houses of Nigeria (AIHN) said the Central Bank of Nigeria’s (CBN) interest rate hikes boosted investors’ demand for fixed-income instruments in 2024.
Its President, Kemi Awodein, hinted at this on Thursday, November 13, at the AIHN’s Annual General Meeting and presentation of its 2024 financial statements in Lagos.
She noted that the apex bank aggressively relied on tightening the interest rate to tackle inflation.
“Key drivers for fixed income instruments in 2024 included CBN’s aggressive interest rate hikes to combat inflation. There were significant interest rate hikes in February and March 2024 (a total of 600 basis points), aimed at curbing inflation. In 2024, CBN hiked the benchmark interest rate eight times and by 875 basis points to 27.5 per cent in November from 18.75 per cent at the beginning of the year,” Awodein said.
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She stressed that the high-interest environment led to crowding out of the private sector, affecting issuance activity.
She pointed out that government borrowing increased significantly, as efforts to manage liquidity were also heightened.
“Data indicates that about N12.83tn in Open Market Operation bills and T-bills were sold compared to N716.7bn for the whole of 2023. Despite these challenges, as the year progressed, there was renewed investor confidence, leading to increased capital inflows.
“This was driven by government policies and the anticipation of interest rate cuts in other markets. Significant in the year was the successful issuance of the first domestic dollar bond by the Debt Management Office,” the AIHN president said.
She said the Nigerian investment banking sector saw significant activity in equity capital raises, spurred by the announcement on recapitalisation by the CBN in March 2024.
“By year-end, a number of banking institutions had concluded transactions, with Access Bank Plc announcing the attainment of the new regulatory capital. The activity in the sector will continue in earnest in 2025 as the deadline of March 2026 approaches,” Awodein said.
According to her, the transition of Aradel Holdings Plc from NASD to Nigerian Exchange Limited was impactful for investors and shareholders, providing investment opportunities as well as enhancing liquidity.
“Long-term debt capital raises were muted in 2024 in light of the interest rate regime and the significant and frequent issuances by the Federal Government. The private sector was essentially crowded out. Activities in debt capital raising were concentrated in Commercial Paper issuances.
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“Capital Raising: Prominent transactions included Seplat Energy’s $650m bond issuance, aimed at expanding its energy operations, and Airtel Africa’s $500m capital raise, which was used to enhance telecommunications infrastructure,” the AIHN president stated.
She noted similarly that by the end of 2024, some banks, including Fidelity Bank, GTBank, Access Bank, FCMB and Zenith Bank, had undertaken issuances targeted at meeting new capital requirements.
“Recapitalisation was completed at year’s end by Access Bank, with all banks being required to complete their respective transactions before the end of Q1 2026,” Awodein added.
Commenting on the AIHN financial statements for 2024, she hinted that total funds and liabilities grew from N452.6m in 2023 to N518.2m.
Total income grew from N86.56 million in 2023 to N123.6 million in 2024, while expenditure for 2023 stood at N50.08 million, and spending for 2024 was N60.75 million, resulting in a surplus of N36.4 million and N62.9 million for 2023 and 2024, respectively.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
