Iran’s Threat to Close the Strait of Hormuz: Implications for Global Oil, Africa, and Nigeria
Iran’s Threat to Close the Strait of Hormuz: Implications for Global Oil, Africa, and Nigeria Recent escalations in the Middle East, sparked by Israeli military actions and subsequent U.S. strikes on key Iranian nuclear facilities, have prompted threats from Iran to shut down the Strait of Hormuz. This strategic waterway is a critical chokepoint for global oil trade, with approximately 20 million barrels of crude oil (nearly one-fifth of the world’s daily supply) passing through it. The oil originates primarily from major producers in the region, including Saudi Arabia, the UAE, Iraq, Kuwait, and Iran itself. A significant share of these energy exports, particularly oil and gas are directed toward Asia, with China and India among the top buyers. In 2024, 84% of the crude oil and natural gas liquids, and 83% of LNG shipments through the strait, were destined for Asian nations including China, India, Japan, and South Korea. Notably, in Q1 2025, China alone accounted for 38% of crude oil imports passing through the channel. With the development, any disruption to this vital route would severely tighten global supply, heighten market instability, drive up crude oil prices and invariably, push up inflation across the globe with the Asian economies likely to be the biggest hit. Impact on Africa The increase in the price of crude oil will impact positively on oil-exporting countries such as Angola and Nigeria by improving fiscal revenues, strengthening external balance, and increasing foreign exchange reserves. Conversely, oil-importing countries like Kenya, Ghana, and Ethiopia are likely to face rising fuel costs, mounting inflationary pressures, and widening current account deficits. Impact on Nigeria For Nigeria, the surge in oil prices is a welcome development from a revenue standpoint. Government revenue and foreign exchange earnings are expected to rise, especially as recent efforts to curb oil theft and pipeline sabotage begin to show results. According to OPEC’s latest data, Nigeria’s oil output rose to 1.544 million barrels per day in May, exceeding its production quota. However, the upside comes with challenges. With the complete deregulation of the downstream oil sector and the full removal of petroleum product subsidies, rising international oil prices would lead to a further increase in the pump price of petroleum products. With this happening, the consumer goods sector will experience higher operating costs and any attempt to pass on this to consumers will reduce demand due to squeezed wallets. Hence, this is likely to impact their bottom-line. For consumers, the rising cost of petroleum products, coupled with the escalating tensions in Benue state and flooding in some of the food producing states would push up prices, eroding consumer purchasing power. Conclusion Nigeria’s economy is susceptible to oil prices. Therefore, the threatened closure of the Strait of Hormuz would impact crude oil prices and its derivatives, which brings more money to the government. However, this also underscores the importance of coordinated efforts between fiscal and monetary authorities to implement stabilization measures that can cushion consumers from the short-term effects of rising oil prices. Meanwhile, international bodies are likely to monitor these developments closely to prevent prolonged disruptions.
The Empire That Ate Itself: A Cautionary Tale for Every Family Leader
The Empire That Ate Itself: A Cautionary Tale for Every Family Leader Chief Adekunle was a titan, a man who had seemingly bent the world to his will. From a single truck bought with his life’s savings, he had forged a logistics empire that spanned continents. His portfolio was the stuff of legends: sprawling properties in Ikoyi and Abuja, a luxury flat in Knightsbridge, a stunning beachfront villa in Dubai, and a significant stake in a burgeoning tech firm. He was a generous man, a loving father to his four children—two from his late first wife and two from his second—and the unwavering pillar of his extended family. He was also, like many visionaries, perpetually in motion. “I’ll get to the paperwork later,” he would say with a wave of his hand when his advisors brought up the topic of a Will. He believed his presence was permanent, his word was bond, and that the love within his family was strong enough to weather any storm. The storm came on a Tuesday afternoon, 30,000 feet over the Atlantic. A sudden, massive heart attack. Chief Adekunle was gone before his private jet touched down. The silence he left in his wake lasted less than a week. Then, the chaos began. His eldest son, groomed to take over, found his authority challenged by his half-siblings, who feared being sidelined. His widow, grieving, was suddenly confronted by his brothers, who claimed the Chief had verbally promised them the Ibadan properties. The board of his company was paralyzed, unsure who had the legal authority to make decisions. International banks in London and Dubai, bound by strict regulations, froze accounts containing millions, demanding legal proof of inheritance that didn’t exist. The empire the Chief had spent 40 years building began to eat itself. The children, once united by love, were now divided by lawyers. The business, a market leader, began to falter as competitors seized on the leadership vacuum. The family name, once a symbol of integrity and success, became fodder for gossip columns. The value of his assets started to erode, eaten away by legal fees and family infighting. It was a tragedy, not of a failed business, but of a failed plan. This story, while fictional, is a painfully realistic reflection of what happens when the architect of a legacy fails to draw up the final, most important blueprint. You have worked tirelessly to build, to create, to provide. You’ve navigated market complexities, outsmarted competitors, and created generational wealth. But the single greatest threat to everything you’ve built isn’t external; it’s the internal chaos that a lack of planning can unleash. The issue is rarely about a lack of love or resources. It is about the lack of a clear, legally sound structure. This is the essence of Estate Planning.It’s a term that often sounds clinical and distant, but it is the most personal and powerful tool you have to protect your life’s work. It is your voice, amplified by the law, ensuring your intentions are carried out precisely as you wish. A well-crafted estate plan does more than just outline who gets what. It preserves family harmony, prevents crippling disputes, protects your assets from being squandered, and ensures the seamless transition of your business and wealth to the next generation. Planning for the future is essential to ensuring your legacy and providing peace of mind for your loved ones. At Parthian Capital, we understand that your journey is unique, and your estate plan must be as well. We offer comprehensive estate planning services tailored to your specific needs and circumstances. Our team of experienced professionals will work closely with you, not just as advisors, but as partners in safeguarding your legacy. We develop a strategic plan that addresses all facets of estate management, from the intricate details of asset distribution across different jurisdictions to sophisticated strategies for tax efficiency that preserve the maximum value of your estate. We navigate the complex legal considerations, translating them into a clear, robust, and actionable plan. Our ultimate aim is to help you preserve your wealth and ensure that your wishes are honoured, providing unshakeable security for your beneficiaries and cementing the legacy you envision. Chief Adekunle built an empire strong enough to withstand any market force, but it couldn’t survive the absence of a plan. Don’t let your life’s work become a cautionary tale. The final, and perhaps most crucial, act of building your legacy is ensuring it is built to last. Let’s have a conversation about protecting what matters most. Contact Parthian Capital today to begin crafting a plan that will secure your legacy for generations to come.
Parthian Capital Limited Increases Investment Opportunities with Two New Investment Funds
Parthian Capital Limited Expands Investment Opportunities with Two New Investment Funds Parthian Capital Limited, the asset management division of the Parthian Group, proudly announces the launch of two investment funds: the Parthian Money Market Fund and the Parthian Dollar Fixed Income Fund. These new offerings are designed to provide investors with secure and customised financial solutions, fostering long-term wealth preservation and growth. During the launch event, Group Managing Director, Oluseye Olusoga underscored the crucial role of the capital market in Nigeria’s economic development. “The capital market is the backbone of Nigeria’s economy,” he stated. “Our new funds are engineered to create long-term value and protect wealth for a diverse range of investors, retail, high-net-worth, and institutional alike. With these funds, we are providing the financial tools that will drive sustainable growth.” L-R: Olufemi Shobanjo, CEO, NGX Regulation; Olufunke Aiyepola, MD/CEO, UTL Trust Management; Abiodun Adebimpe, West Africa Regional Head, Custodial Services, Rand Merchant Bank; John Briggs, Lagos Head, Securities and Exchange Commission (SEC); Adedotun Sulaiman, MFR, Chairman, Parthian Partners; Ndidi Ukaonu, Director, Parthian Group; Ibilola Ashcroft, MD Designate, Parthian Capital; Oluseye Olusoga, Group MD/CEO, Parthian Group; Regina Asala, Rand Merchant Bank; Omowonuola Kunle-Bello, Head, Fund & Investment Manager Ratings, Agusto & Co; Benard Esan, Rep. of Company Secretary, Alsec Nominees; Oyindamola Ehiwere, CEO, Alsec Nominees. The Chairman of Parthian Group, Adedotun Sulaiman also emphasised the essential role of investments in economic development, stating, “Capital is the oxygen of the economy, and without capital, we can’t go very far.” Acting Managing Director of Parthian Capital Limited, Ms. Ibilola Ashcroft, expressed excitement about the new offerings. “We are thrilled to introduce our investment funds to the market,” she said. “Each fund is meticulously structured to provide secure, dependable, and diversified investment solutions that align with our clients’ financial aspirations.” Ashcroft further noted, “The Parthian Money Market Fund is designed to offer competitive returns while minimizing risk, allowing investors to optimise their portfolios without compromising on safety. Our team is dedicated to delivering personalised strategies that empower our clients to reach their financial goals.” L-R: Olufunke Aiyepola, MD/CEO, UTL Trust Management; Abiodun Adebimpe, West Africa Regional Head, Custodial Services, Rand Merchant Bank; Adedotun Sulaiman, MFR, Chairman, Parthian Partners; Ndidi Ukaonu, Director, Parthian Group; Ibilola Ashcroft, MD Designate, Parthian Capital; Oluseye Olusoga, Group MD/CEO, Parthian Group; Regina Asala, Rand Merchant Bank; Omowonuola Kunle-Bello, Head, Fund & Investment Manager Ratings, Agusto & Co The Parthian Money Market Fund is a low-risk, open-ended investment vehicle focused on capital preservation and steady income generation. It offers investors a secure way to manage cash through diversified investments in short-term money market instruments. Meanwhile, the Parthian Dollar Fixed Income Fund enables investors to diversify their portfolios with dollar-denominated securities, serving as an effective hedge against Naira depreciation while providing attractive returns. The formal launch event brought together key stakeholders, investors, and industry leaders to celebrate this milestone and gain insights into Parthian Capital’s innovative approach to wealth management. For more information about these investment funds and to explore detailed product information, please visit www.parthiancapitalng.com. L-R: Adedotun Sulaiman, MFR, Chairman, Parthian Partners; Ndidi Ukaonu, Director, Parthian Group; Ibilola Ashcroft, MD Designate, Parthian Capital; Oluseye Olusoga, Group MD/CEO, Parthian Group About Parthian Capital LimitedParthian Capital Limited is a leading asset management firm in Nigeria, offering tailored investment solutions to individuals and institutions. As part of the Parthian Group, the company is committed to driving financial inclusion and economic growth through innovative products and services.
Fixed Income Quarterly – Q3
Fixed Income Quarterly – Q3 2023 Macro-Economic Overview Nigeria’s inflation continued to climb, reaching 25.80% in August, over 300bps increase from figures as at the end of Q2 2023. On the back of the persistent rise in inflation, the MPC decided to increase the MPR by 25bps to 18.50%, narrow the asymmetric corridor to +100/-300 basis points around the MPR, while retaining the CRR and Liquidity ratio at 32.50% and 30% respectively at the July 2023 MPC meeting. The September meeting was postponed to further notice A new CBN governor, Dr. Olayemi formally assumed duty in an acting capacity last week Friday, September 22, 2023, after which the Senate approved his nomination. New Deputy Governors of the Central Bank of Nigeria were also confirmed by the Senate. Oil prices averaged $83.80/$ in Q3, peaking at $96.55/$ on 27Sep on the back of the tight global supplies, following the deal to reduce production by major producers – Saudi Arabia and Russia. Brent crude oil closed the quarter at $96.10/b. Nigeria’s Gross Domestic Product (GDP) grew by 2.51% (year-on-year) in real terms in the second quarter of 2023. This growth rate, lower than the 3.54% recorded in Q2’2022, can be attributed to the challenging economic conditions in the nation. The Nigerian FX reserve dropped to $33.25bn as at 26th September, amid FX supply challenges. Interbank liquidity averaged c.N312bn through the quarter, closing around c.N35bn after hitting a high of c.N896bn early July and a low of repo c.N396bn mid September. Total FAAC disbursement for the quarter was c.N2.042trn with c.N1.15trn for Jul and c.N891.93bn for May respectively. Sources: FMDQ, CBN, NBS, Bloomberg Market Performance in Q3-2023 Bond market The Nigerian local bond market traded on a mixed note during Q3 2023, with yields generally trending upwards. The bears dominated the market in July and August, following the MPC’s decision to increase the monetary policy rate by 25bps to 18.75%. However, the market turned mildly bullish in towards the end of September, with demand skewed to the shorter-term maturities. Yields on benchmark bonds rose by 150 bps on average during the quarter. The market climate, however, took a turn as September drew to a close, with a mild bullish wave encompassing the market. Notably, there was an increase in demand for shorter-term maturities. The fluctuating trends culminated in a net increase of the benchmark bond yields by an average of 150 basis points by the end of the quarter. Several factors came into play to drive these trends in Q3 2023: Hawkish CBN stance: The Central Bank of Nigeria (CBN)’s hawkish stance to curb inflation was a key driver of the upward trend in bond yields in Q3 2023. The CBN raised the monetary policy rate by a cumulative 100 bps over the quarter, to 18.75%. This increase in interest rates made it more expensive for borrowers to borrow money, which in turn led to a rise in bond yields. Inflation concerns: Inflation remains a major concern in Nigeria, with the headline inflation rate rising to a 17-year high of 20.52% in August 2023. High inflation erodes the purchasing power of investors, making them less willing to invest in long-term bonds with fixed interest rates. System liquidity: System liquidity tightened in Q3 2023, due to a number of factors including the CBN’s open market operations (OMOs) and the loan-to-deposit ratio (LDR) policy. This tightening in liquidity made it more expensive for banks to lend money, which in turn led to a rise in bond yields. Treasury bill market The treasury bills market recorded mixed sentiments amid cautious trading in Q3.The quarter started off with bullish bias as participants sourced for attractive on the back of the relatively liquid system. Mid quarter, offers improved across board following the significant hike in the stop rates at the auctions, and tight system liquidity, as players looked to fund their obligations. Also, the CBN floated the first OMO auction of the year which saw participants looking to exit their positions in anticipation for higher yields. Throughout the quarter, we recorded an uptrend in stop rates at the auction, save for the last auction which saw a decline of 151bps, 45bps and 161bps on the standard tenors respectively. All in all, stop rates improved by 213bps, 305bpsand 543bps to close the quarter at 4.99%, 3.05% and 11.37% respectively. Eurobond Market The SSA Eurobond market experienced a volatile Q3 2023, with yields fluctuating on global economic factors, domestic economic developments, and central bank decisions. The quarter began with bearish sentiment, as the US Federal Reserve signaled more rate hikes due to persistent core inflation. However, sentiment turned bullish in mid-July following favorable US CPI data (down from 4.10% to 3.00%) and strong consumer sentiment. This bullish trend continued through late July, as the US economy beat expectations and inflation remained controlled. However, the market turned bearish in early August, following a US credit rating downgrade, to AA+ from AAA, citing fiscal deterioration and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills. The market remained mixed for the remainder of August, as investors weighed global economic risks and domestic economic developments. In September, the market saw bearish sentiment again, as US inflation surged from 3.20% to 3.70%, and the Fed maintained a hawkish stance. Overall, the SSA Eurobond market experienced a volatile Q3 2023, with yields fluctuating on a range of factors. There was a shift in investor focus towards shorter-maturity Eurobonds. This suggests that investors are seeking to reduce their exposure to long-term risk. Country Event Nigeria Nigeria’s Eurobond market experienced mixed performance in Q3 2023. Yields were up in the early part of the quarter, but turned bullish in mid-July following favorable US CPI data and strong consumer sentiment. However, yields rose again in early August following a US credit rating downgrade. The market remained mixed for the remainder of the quarter, as investors weighed global economic risks and domestic economic developments. In terms of domestic economic developments, Nigeria’s inflation rate hit a
Fixed Income Quarterly – Q1 2024
Fixed Income Quarterly – Q1 2024 Macro-Economic Overview Nigeria’s inflation hit an all-time high, reaching 31.70% in February, with food inflation at 37.92% and core inflation at 25.13%. To contain the fast-rising consumer prices, the MPC continued its hawkish stance, as the MPR was increased by 400bps to 22.75% in February, following a further jump to 24.75% in March. The asymmetric corridor changed to +100/-700 in February before it was returned to the previous range (+100/-300 around the MPR) in March. The CRR was also increased to 45% from 32.50%, while the liquidity ratio was retained at 30%. Oil prices averaged $81.66/b in Q1, peaking at $87.70/b on the 19th of Mar, on the back of the disruption to the Russian refining activities following attacks from Ukraine. Nigeria’s Gross Domestic Product (GDP) grew by 3.46% y-o-y (year-on-year) in real terms in the fourth quarter of 2023, coming from a 3.52%y-o-y recorded in Q4’2022. The growth recorded was largely driven by the service sector, which recorded a growth of 3.98% y-o-y. The Nigerian FX reserve has recorded some improvement this quarter, as it currently stands at $34.3bn coming from $32.9bn in Q4 2023. This can be attributed to improved diaspora remittances, foreign portfolio investment and crude oil earnings amidst settlement of outstanding forward contracts. Interbank liquidity averaged repo c.N236bn through the quarter, with a high of c.N863bn early January and a low of repo c.N2.29trn mid-March. The Total FAAC disbursement for the quarter stood at c.N3.40trn with February recording the highest at c.N1.15trn. Sources: FMDQ, CBN, NBS, Bloomberg Market Performance in Q1-2024 Bond market The bond market opened the year with participants trading cautiously while awaiting the Q1 bond auction calendar. The Jan-24 bond auction release saw the removal of 53s which led to a bit of rally especially on the 2053 paper. The first auction of the year saw stop rates close higher leading to yields adjusting across the curve in the secondary market amid sparce bids as players focused on the shorter end of the curve. The bearish bias continued mid quarter with offers across the curve as bids remained limited. The Feb-24 bond circular saw new 7-year and 10-year bond issuance which further fueled the bearish bias. Following the outcome of the auction with papers closing significantly higher, the bond curve adjusted yet again in the secondary market. Towards the end of Q1, activity waned in the bond market as most players remained on the sidelines. The bond circular for Mar saw the re-opening of the 7-year and 10-year papers and the introduction of a new 3-year issuance. Following the auction, bearish sentiments amid cautious approach was sustained as there was also a private sale of N2.35tn worth of bonds (new 26s, new 27s, new 28s) by DMO. Closing the quarter, average yield rose by c.126bps across the curve. Treasury bill market The Treasury bills market opened the year with bullish bias on the back of the system liquidity. The continued demand drove yields lower leading to a resistance in the market towards the end of the month. This led to a reversal in yields coupled with the lower system liquidity witnessed amid the high stop rate in the persistent OMO auctions by the CBN. Mid quarter, bearish sentiments were dominant as market players sold off their positions in a bid to prepare for the high yield environment. This bearish momentum was further fueled by the NTB auction calendar with an over c.N1tn offer and anticipated increase in MPR. Most activity remained on the newly issues papers. Towards the end of the quarter, the treasury bills market recorded mixed sentiments albeit with a bearish bias on the back of the low system liquidity. A bit of cherry picking was seen especially on the long end. Offers were seen across board especially on the longer end of the curve as players sold off their positions to meet their obligations. The quarter ended with the Feb-25 and Mar-25 maturities trading around 18.85% and 18.95% respectively. Eurobond Market The SSA Eurobond market started the year with cautious optimism. The market in Q1 2024 has been influenced by a variety of factors, including global economic trends, geopolitical developments, central bank policies, and domestic economic conditions. Some nations reported improved economic growth and improved fiscal positions, supporting investor confidence in their sovereign bonds, while others grappled with challenges such as high inflation, fiscal deficits, and debt sustainability concerns. SSA sovereigns faced pressures at the start of 2024 due to fiscal concerns and a stronger dollar from a high interest rate driven by global central bank inflation-fighting policies via rate hikes. African countries are, however, now returning to the international debt capital market to access funds amidst sluggish economic expectations in 2024, as expectations of a possible global rate cut in 2024 continue to support investors’ interest. Global Economic Factors Economic data from the United States, including 3.4% GDP growth in Q4 2024 (vs. 4.9% in Q3 2023) and mixed signals in the labour market (highest unemployment rate since January 2022 at 3.90% vs. 275,000 added jobs in February, up from 229,000 in January), drove moderate uncertainty in the pace of anticipated rate cuts later in the year. Also, escalating geopolitical tensions, including the Russia-Ukraine and Israel-Palestine wars and their impact on energy prices (brent crude briefly crossed $87 per barrel), contributed to market volatility. Concerns over inflationary pressures and supply chain disruptions from attacks by rebels in the Red Sea also influenced market sentiment. The central banks of developed economies, including the US Federal Reserve, maintained a cautious approach to monetary policy. The Fed signalled a holding pattern on interest rates, recently leaving rates unchanged in March. However, the Fed’s stance leans towards three cuts by the end of 2024, contingent on inflation continuing to decline towards their target of 2%. Investors in the SSA Eurobond market generally interpreted the US Fed stance with cautious optimism. Country Event Nigeria Nigeria’s Eurobond market saw mixed performance in Q1 2024. During the quarter, factors
