Nigeria’s benchmark stocks measure fell for the first day in seven as investors awaited the funding plans of a government-owned company set up to buy bad debts from the country’s lenders, an analyst said.
The 214-member All-Share Index dropped 0.5 percent to 24,807.04 by 12:30 p.m. in Lagos, according to data from the bourse’s website. Declines were led by First Bank of Nigeria Plc, the nation’s second-biggest lender by market value.
Asset Management Corp. of Nigeria, or Amcon, will sell 2.5 trillion naira of three-year, zero-coupon bonds to finance the purchase of toxic debts from banks, managing director Mustafa Chike-Obi said Dec.1. The first tranche of the bonds will be sold by Dec. 31, he said.
“The fact that Amcon first has to mobilize funds from the sale of the bonds means that investors want to wait and see what will happen,” Chinenyem Anyanwu, chief executive officer of Dependable Securities Ltd., a Lagos-based brokerage, said by phone today. “They want to put their money into other investment alternatives including treasury bills and bonds now because it’s about the time value of money.”
Nigeria’s 91-day treasury bill had an average yield of 7.9027 percent at an auction of the securities last month.
The debt purchases will help the banking system, which almost collapsed in 2008 after extending loans to investors in the stock market, to resume lending to companies and revive economic growth. The Central Bank of Nigeria fired the chief executive officers of eight lenders last year and bailed out the industry with $4.1 billion.
The market will determine the value of the zero-coupon bonds and therefore how much Amcon raises in funds, Chike-Obi said. The central bank said in a statement on Nov. 9 that Amcon would buy 2.2 trillion naira of bad debts from the banks, more than a previous forecast of $10 billion naira.
First Bank lost 3.3 percent, to 12.52 naira, its lowest since Nov.8. Guaranty Trust Bank Plc, the third-biggest lender, lost 2.7 percent, the steepest drop since Nov. 12, to 16 naira.
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