Financial market update

19 December 2011, Sweetcrude, Lagos – Local and international financial market update.

· EUROPE – European finance ministers will today seek to meet a self-imposed deadline for drawing additional aid to the debt crisis and to form new budget rules as investor confidence that a comprehensive solution is achievable wants. Euro-areas finance ministers will hold a conference call today to discuss 200 billion Euros in additional funding through the international monetary fund.

· CHINA – Chinese central bank data signalled that capital flowed out of the nation for a second month in November, as bets for Yuan appreciation diminished. Yuan positions at financial institutions accumulated from foreign-exchange purchases stood at 25.46 trillion Yuan as of the end of November, down 27.9 billion Yuan in the month.

· INDIA – India is trailing Indonesia in the bond market like never before. Indian 10-year sovereign notes denominated in rupee yielded 214 basis points more than similar maturity Indonesian rupiah debt as of this morning, after touching an unprecedented 277 basis points on November 14 according to data compiled by Bloomberg.

· Economic / Central Bank News

The President Thursday subtly defended his decision to leave out fuel subsidy from the 2012 budget, painting a graphic picture of how the country has been borrowing to fund capital projects when the money spent on subsidy alone would have sufficed instead. The House of Representatives has demanded that subsidy must be returned to the budget. In the Senate, members were unanimous in condemning the provision of N922 billion for security in the 2012 budget – a position the House also agrees with, arguing that the vote was bloated and lopsided.

· Bonds – Market activity continues to be quiet with very little movement along the curve. Market activity is expected to continue to be relatively muted over this festive season and in the run up to the New Year.

· Bills – Quiet in the bill market as well, as the year winds down. Most of the activity was concentrated on the short dated maturities. The Jan & Feb 2012 bills.

· Money Market – OBB stable at 14.00% with unsecured rates up 50bps to 16.00%.”

FX

                         Hi                 Low             Close           Prev.Close

USD/NGN   162.20/30     161.30/40     161.50/60      162.16/26

NIBOR(%)                       LIBOR (%)
O/N               16.3333     USD 1 month       0.2849
7 Day             16.6250    USD 2 month       0.4139
30 Day          17.0000    USD 3 month       0.5632
60 Day          17.3750     USD 6 month       0.7880
90 Day          17.5000    USD 12 month      1.1104
Y/Y Consumer Inflation Oct 2011 :               10.50%
FX Reserves: 08 December 2011   (USD bn) 33.144
MPR                                                                     12.00%
Source: FMD and CBN

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