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Zenith Bank’s half year results trigger buying interest in its Eurobonds


Zenith Bank’s half year results trigger buying interest in its Eurobonds

THERE are strong indications that the significant buying interest in Zenith Bank’s Eurobonds may be connected to the recently released impressive half year (H1):2017 result of the bank, according to dealers.

Across the Nigerian Corporate Eurobonds, performance remained mixed as Tier-1 banks’ bond yields fell while some Tier-2 yields rose. Investor interest was majorly centered on the ZENITH 2022 and 2019 bonds (which fell 17bps and 3bps respectively), the Subordinated and Senior ACCESS 2021 debt Notes (yields declined 3bps apiece) and FBN 2021 (-5bps) and GUARANTY (-1bp).  DIAMOND 2019 and FBN 2021 instruments remain the top price gainers in the year, up 22.5per cent and 19.1per cent year to date (YTD).

Zenith raised $500million Eurobond in May which analysts said could increase its funding costs.

However, at home, shares in Zenith Bank fell for a second session in a row last Friday after the lender declared a lower than expected interim dividend, despite a sharp rise in first-half earnings.

The top tier Nigerian lender said late on Thursday its pretax profit in the first six months jumped 71 per cent to N92.2 billion ($264 million) and it declared N0.25 interim dividend.

“Some investors sold their holding in the bank after the disappointing dividend,” Reuters quoted Austin Egberi of Fund Matrix & Assets Management as having said.

Traders said investors were expecting a higher payout at the half-year point to continue holding the stock, which had doubled in value by the end of July from its 2017 low hit on March 13.

The stock fell 1 per cent to N23.75 on Friday, the lowest since July 26.

“Zenith lost today despite the release of better than expected H1 earnings,” Vetiva Capital analysts said. “We believe that the declines might be attributable to profit taking.”

Stanbic Stockbrokers upgraded its target price to N28.60 from N25 and forecast the bank’s full-year pretax profit would come in at N184billion, up 18 per cent.

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