Bad News: Global Bank UBS Ends Coverage of Nigerian Bank Eurobonds

UBS Group AG ceased its fixed-income research coverage of Nigeria’s banks, according to a person with knowledge of the matter, as international investors increasingly shun Africa’s biggest oil producer and economy.
The lender cut its coverage of five banks on Thursday, including Guaranty Trust Bank Plc and Zenith Bank Plc, Nigeria’s two biggest lenders by market value, citing a lack of liquidity in their Eurobonds, said the person, who asked not to be identified because it hasn’t been made public. Access Bank Plc, Diamond Bank Plc and FBN Holdings Plc, owner of First Bank of Nigeria Ltd., were the other lenders affected, said the person.
JPMorgan Chase & Co. removed Nigeria from its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds, in September, because of central bank curbs on currency trading that made it difficult for foreign investors to buy and sell naira debt. Barclays Plc followed suit about two months later with its equivalent bond index.
Those trading restrictions, which the central bank has had in place for almost a year to support the naira’s peg of roughly 197-199 to the dollar, may also cause Nigeria to be removed from the MSCI Frontier Markets Index of stocks, Charles Robertson, the chief economist at Renaissance Capital Ltd., said in a note to clients Feb. 10. Nigeria has the second-biggest weighting in the gauge after Kuwait.
Nigeria, which derives most government revenue and almost all export earnings from oil, has been battered by the slump in crude prices to 12-year lows. Economic growth slowed to 3 percent last year, the least since 1999, according to the International Monetary Fund.

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