Gross Official Reserves Increased to US$36,8bn in September 2021

Proshare

Friday, October 08, 2021 / 09:09 AM / by FBNQuest Research / Header Image Credit: iStock


Proshare Nigeria Pvt. Ltd.


Our chart today shows an uptick of USD2.8bn in gross official reserves to USD36.8bn in September. For a more accurate picture, we must adjust this gross figure for the pipeline of delayed external payments estimated at +/- USD3bn. Total reserves at end-July covered 8.8 months' merchandise imports on the basis of the balance of payments for the 12 months to March '21, and 6.8 months when we add services. The current reserves level is reasonably satisfactory. We expect to see a further increase in the short term particularly in the light of the recently completed Eurobond issuance and rising oil prices.

 

The FGN's return to the Eurobond market last month was very successful. The order book peaked at USD12.2bn which enabled the government raise USD4bn - USD1bn more than the USD3bn initially announced - in 3 tranches of 7-year bonds (USD1.25bn at 6.125%), 12-year bonds (USD1.5bn at 7.375%), and 30-year bonds (USD1.25bn at 8.250%). As we have noted previously, Nigeria's gross reserves are calculated on a 30-day moving average basis; as such, we expect to see the Eurobond proceeds steadily boost the reserves in the coming weeks.


Proshare Nigeria Pvt. Ltd.


We recall that the National Assembly approved a USD6.2bn external borrowing plan for the year. So far, only USD4bn has been raised.  Given the complexities of conditionality, the prospect for multilateral financing is not very strong. This has led to speculation that the FGN may seek to raise USD2.2bn via the capital market for the second time this year. A second Eurobond issue is possible given that Egypt has also tapped the Eurobond market twice this year already (in February and September) to raise a total of USD6.8bn.

 

Although higher oil prices should be positive for most oil-producing nations, given Nigeria's limited production capacity, we do not expect Nigeria to reap the full advantages. According to OPEC figures, Nigeria's oil output fell 7% m/m to 1.2mbpd in August, below its production quota of 1.55mbpd.

 

Assuming the FGN somehow raises the additional USD2.2bn, we see reserves at +/- USD40bn by year-end, barring any large outflows.

 

Gross official reserves (USD bn)

Proshare Nigeria Pvt. Ltd.

Sources: CBN; South African Reserve Bank (SARB); Central Bank of Egypt (CBE); FBNQuest Capital Research 


Proshare Nigeria Pvt. Ltd.


Related News

  1. NAFEX Rate Depreciated by 0.16% WoW to N413.14 from N412.48
  2. The Endless Roller Coaster of the Naira in 2021
  3. A Market Determined FX Regime is Nigeria's Best Option - Muda Yusuf
  4. NAFEX Rate Depreciated by 0.13% WoW to N412.48 from N411.95
  5. NAFEX Rate Depreciated by 0.17% WoW to N411.95 from N411.25
  6. AbokiFX Suspends Currency Rate Updates; Aftermath of CBN Crackdown
  7. Parallel Market Pressures: No End in Sight?
  8. Parallel Market Rate at an All-time High of N550
  9. Remittance to Africa Projected to Decrease in 2021
  10. Naira Depreciated by 1.10% WoW in the Parallel Market at an Average Exchange Rate of N532.00
  11. Gross Official Reserves Increased by US$610m to US$34.02bn in August 2021
  12. IEFX Total Transaction Value Decreased by 4.86% to $629.34m
  13. Nigeria-China Currency Swap: Still Waiting for a Deal
  14. Evaluating BDCs' Creative FX Supply Sources, Parallel Market Rate Hits N527
  15. A Significant Reduction in FX Utilisation
  16. Naira Depreciated at the Parallel Market by -0.54% WoW to N518.60 from N515.80
  17. Recent FX Pressures: Storm Before the Calm?
  18. The Definitive Guide in Investing in The Right Order
  19. Best Forex Brokers: 5 Top Forex Trading Platforms
  20. Naira Depreciated at the Parallel Market by -1.02% WoW to N515.80 from N510.60

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP