Financial market update

27 January 2012, Sweetcrude, Lagos – Local and financial market update.
EUROPE : Opposition to payouts on Greek credit default swaps from European policy markets is softening as disputes over a voluntary debt exchange threaten to push the nation into default. It is estimated that any agreement between the Greek government and the Washington Based Institute of International Finance on debt write downs will only bind 50% of investors in EUR206bn of notes being negotiated. Hedge funds may resist a deal seeking to get paid in full or compensated from insurance contracts.

INDIA: Indian Rupee climbed to an 11 week high after the central bank eased monetary policy for the first time since 2009 to support economic growth prompting investors to books holdings of local stocks and bonds.

CHINA: China’s property prices need to decline 30% to reach a reasonable level according to He Keng, a deputy director of the Financial and Economic Affairs Committee of the NPC. House prices should be equal to about six years of a salary for a family the lawmaker says.

NIGERIA: The unrest in Nigeria of the past year is clearly directly linked to the very uneven nature of distribution of resources between oil producing regions and those without oil, says Central Bank Governor.

Bonds – Active market with liquidity spreading to the 2018 & 2019 maturities on Thursday after the fresh injection from Wednesday’s auction. Their yield adjusted upward to mirror the cut off in primary. A lot of cautious trading intraday with yields not moving significantly besides the bonds which were auctioned. The new ten year issue should begin trading on Monday.

Bills – With a few players missing out on the auctions and with the primary rate dipping by up to 90bps on the 182day bill, market opened bullish across the piece as

some players tried to fill their orders on Thursday. Some light profit taking toward the close kept rates down on 20-30 bps on average.

Money Market – OBB & unsecured rates are trading up at 14.50% & 15.50%. Liquidity is still thin though the markets are expecting the inflow of FAAC which was approved early last week.

Hi Low Close Prev.Close

NIBOR(%)                        LIBOR (%)
O/N                15.1250     USD 1 month              0.2728
7 Day            15.5417      USD 2 month             0.4052
30 Day          16.2083    USD 3 month              0.5566
60 Day          16.5667     USD 6 month             0.7918
90 Day          16.8750     USD 12 month           1.1080
Y/Y Consumer Inflation December 2011 :         10.30%
FX Reserves: 20 January 2012              (USD bn) 33.90
MPR                                                                               12.00%
Source: FMD and CBN

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