Business
Nigerian Stocks Sustain Rally On Exim Bank Loan
Nigerian Stocks rose on Friday for the sixth day, the longest rally in five months, following a report that the U.S. Export-Import Bank approved a $1 billion loan supporting guarantees to 14 lenders bailed out by the Central Bank of Nigeria (CBN) in 2009.
The Nigerian Stock Exchange’s All-Share Index added as much as 1.8 percent, the most since October 5, to 21, 861.56 and was up 1.7 per cent, Bloomberg data show.
Gains were led by First Bank of Nigeria Plc, the nation’s biggest lender, Zenith Bank Plc, Oceanic Bank Plc and Stanbic IBTC Plc. The NSE’s Banking Index advanced for an eighth day, its best rally since May, last year.
The West African nation’s main index was the world’s second worst performer after Ghana’s last year, dropping 34 percent mainly on concern that bad debt at Nigerian banks had grown.
New York-based Eurasia Group estimated in May 2009 that the lenders has as much as N1 trillion ($6.8 billion) of toxic assets. A Central Bank audit of the industry resulted in N620 billion being injected into banks to cover bad debts in August and September last year.
The U.S. Exim Bank approved the loan based on policy changes undertaken by the Central Bank to overhaul the country’s financial system.
The Central Bank will guarantee all interbank borrowings until the end of this year, Governor Sanusi Lamido Sanusi said last week.
Sanusi expects Nigeria’s parliament to approve, in about three weeks, the creation of an asset-management company that will buy bad debts from commercial banks.
“We take comfort that the guarantee is for all the banks including the healthy banks and therefore gives no undue liquidity/funding advantage to any one group of banks, until, we suspect, audited accounts are published”, Brent Malahay, a Johannesburg-based analyst at J.P Morgan Securities Inc. wrote.
Investor Mark Mobins said Nigerian stocks have good valuations, with “nice opportunities in banks that have regional exposure”.
“Most interesting for us in Nigeria are the banks” Mobins, executive chairman of Templeton Asset Management Limited, which manages more than $30 billion in emerging-market assets, said in a phone interview from Singapore.