Financial market update

15 December 2011, Sweetcrude, Lagos – Local and international financial market update.
· EUROPE – The Euro traded 0.4 percent from the weakest level in 11 months against the dollar amid concern Europe’s sovereign-debt crisis will drive up borrowing costs for Spain at a bond auction today. The Euro also traded near its lowest level in 10 weeks against the yen/

· U.K – The United Kingdom is weathering the debt storm plaguing its euro peers, with the government’s commitment to spending cuts and the Bank of England’s scope to stimulate the economy safeguarding the nation’s top credit rating.

· CHINA – China’s manufacturing may contract for a second month in December as Europe’s debt crisis weighs on exports and home sales slide, preliminary results from a survey indicates. Reports show that money supply expanded by the least in a decade in November and communist Party leaders yesterday described the global outlook as “very grim”.

· Economic / Central Bank News

The President yesterday presented a N4.749t budget proposal to the National Assembly. The 2012 budget proposal reflects a modest increase of 6% over the N4.484t appropriated for the 2011 fiscal year, and capital share of about 28% of total expenditure, against 26% in the previous year, the allocation for recurrent expenditure is 72%, down from 74.4% in 2011. Aggregate expenditure comprises N398b for Statutory Transfers; N560b for Debt Service; N2.472t for Recurrent (Non-Debt) Expenditure. Capital expenditure has an allocation of N1.32 trillion.

· Bonds – Fairly quiet session yesterday, low volumes with some light buying across the curve. The market waiting on the bond auction where rates would likely dip on the back of large demand by PFAs.

· Bills – Bearish through yesterday’s session, in reaction to the OMO auction result seeing rates up an average 30bps across all the maturities. Liquidity is slowly reducing in the lead up to the holidays.

· Money Market – OBB & Unsecured rates are stable at 14.00% and16.00% today. ”

· NGN: CBN offered and sold $200mio, total demand was $256.68mio. CBN cut-off rate was 156.70


                         Hi                       Low          Close          Prev.Close

USD/NGN   162.54/64        161.95/05      162.10/20     162.30/40

NIBOR(%)                     LIBOR (%)
O/N            15.6250      USD 1 month         0.2826
7 Day          16.2080     USD 2 month         0.4074
30 Day       16.4580      USD 3 month         0.5551
60 Day       16.7920      USD 6 month         0.7785
90 Day       17.0420      USD 12 month       1.0992
Y/Y Consumer Inflation Oct 2011 :               10.50%
FX Reserves: 08 December 2011  (USD bn) 33.144
MPR                                                                    12.00%
Source: FMD and CBN

About the Author