FBN Holdings Plc, owner of First Bank Nigeria, said it expects to benefit from a surge in sales of bonds by state governments to replace dwindling oil revenue and after peaceful elections bolstered investor confidence.
“We expect a lot of the state governments to go to the market to issue bonds to be able to fund their projects,” Chief Executive Officer Bello Maccido said in an interview. “It presents an opportunity for the investment-banking business.”
The 36 states comprising Africa’s largest economy get the bulk of their budgets from their share of the nation’s oil income, which has slumped after crude prices declined by more than 50 percent since June. Nigerian bonds and equities surged as President Goodluck Jonathan conceded defeat to former military ruler Muhammadu Buhari following a March vote, soothing investors’ concerns that a disputed result may cause election-related violence.
“The successful conclusion of the election will bring back local and foreign investors that are comfortable with the outlook of the economy,” Maccido said Monday at FBN’s offices in Nigeria’s commercial capital, Lagos.
Seven Nigerian states applied to the Securities and Exchange Commission for approval to raise a total 140.3 billion naira ($704 million) in January to September last year for projects including roads, schools and markets, according to figures from the Abuja-based SEC. The regulator was less willing to approve state debt before the presidential polls because it wanted to ensure judicious use of the funds, former Director-General Arunma Oteh said last year.
“Since the bonds will be tied to projects, they’ll be able to generate cash flow and the governments able to make repayment,” Maccido said.
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