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Nigerian stocks sustain long rally on $1b ExIM loan
January 11, 2010

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 in 2009.

The Nigerian Stock Exchange All-Share Index added as much as 1.8 per cent, 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 per cent mainly on concern that bad debt at Nigerian banks had grown.

New York-based Eurasia Group estimated in May 2009 that the lenders had as much as 1 trillion naira ($6.8 billion) of toxic assets. A central bank audit of the industry resulted in N620 billion being injected into 10 banks to cover bad debt in August and September last year.

The U.S. Ex-Im 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 in an e-mailed note to clients on Friday.

Investor Mark Mobius said Nigerian banking stocks have good valuations, with "nice opportunities in banks that have regional exposure."

"Most interesting for us in Nigeria are the banks," Mobius, executive chairman of Templeton Asset Management Limited, which manages more than $30 billion in emerging-market assets, said in a phone interview from Singapore.

"The banks are very, very interesting and I would say going forward some of the consumer stocks also because it is a big and attractive market."

The Guardian Newspaper, Monday January 11, 2010

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