The Association of Issuing Houses of Nigeria (AIHN) has reported that the Central Bank of Nigeria’s (CBN) bold interest rate increases have significantly heightened investor appetite for fixed income assets in 2024.
In her remarks during the AIHN’s Annual General Meeting and the unveiling of the financial statements for 2024 in Lagos, the association’s president, Kemi Awodein, noted that the central bank has strategically employed these interest rate escalations to combat inflationary pressures this year.
She articulated: “The foremost catalysts for fixed income securities in 2024 were CBN’s assertive interest rate hikes aimed at tackling inflation. Notably, extraordinary increases were recorded in February and March 2024, amassing a total of 600 basis points in an effort to rein in inflation. Throughout 2024, the CBN adjusted the benchmark interest rate upward on eight occasions, culminating in a rise of 875 basis points to 27.5 percent in November, up from 18.75 percent at the year’s inception.”
Awodein elucidated that the prevailing high-interest environment hindered the private sector, adversely impacting issuance activities.
She shared: “Data reveals that approximately N12.83 trillion in Open Market Operations bills and Treasury bills were transacted, in contrast to merely N716.7 billion over the entire year of 2023. In spite of these hurdles, as the year advanced, a resurgence of investor confidence emerged, fueling increased capital inflows.
“This momentum was catalyzed by government policies as well as expectations of interest rate reductions in alternative markets. A notable highlight of the year was the successful launch of the first domestic dollar bond by the Debt Management Office.”
The AIHN leader disclosed that in 2024, Nigeria’s investment banking sector experienced substantial activity in equity capital raises, driven by the CBN’s March announcement regarding recapitalization.
She commented: “By the conclusion of the year, several banking institutions had successfully executed transactions, with Access Bank Plc declaring its achievement of the new regulatory capital requirements. Activity within this sector is anticipated to escalate in 2025 as the March 2026 deadline approaches.
“Long-term debt capital raises were subdued in 2024 due to the prevailing interest rate environment and the substantial, frequent issuances by the Federal Government, effectively stifling private sector participation. Efforts in debt capital raising were primarily oriented towards Commercial Paper issuances.
“Capital Raising of note included Seplat Energy’s $650 million bond issuance, aimed at expanding its energy ventures, along with Airtel Africa’s $500 million capital increase, designated for bolstering telecommunications infrastructure,” she articulated.
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Meanwhile, the AIHN’s financial declarations for 2024 indicated that total funds and liabilities expanded from N452.6 million in 2023 to N518.2 million in 2024.
Its total income rose from N86.56 million in 2023 to N123.6 million in 2024, while expenses for 2023 were recorded at N50.08 million. Expenditures for 2024 reached N60.75 million, resulting in surpluses of N36.4 million and N62.9 million for 2023 and 2024, respectively.
