Financial market update

14 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: As part of reform on the nation’s mortgage system, the CBN has issued new regulatory guidelines for PMBs aimed at recapitalizing and repositioning them as specialized banks through the Other Financial Institutions Supervision Department (OFID) of the CBN. Under the new capital requirement, state and national PMBs will shore up their shareholders fund to the tune of N2.5 billion and N5 billion respectively.

UK: U.K. stocks declined for a second day as Japan’s gross domestic product expanded less than estimated, while Bank of England Governor Mervyn King said that the euro area’s debt crisis will persist. The FTSE 100 Index declined 0.3 percent to 5,831.88 at the close in London yesterday. The gauge had risen for the previous two weeks after European Central Bank President Mario Draghi pledged to do everything to protect the euro.

INDIA: India has no space for economic stimulus to respond to a future crisis partly because it faces high inflation, central bank Governor Duvvuri Subbarao said. The Reserve Bank of India left interest rates unchanged in July, breaking with a wave of cuts in borrowing costs from China to Brazil as the global recovery falters. The pace of Indian price rises has held above 7 percent for most of 2011, stoked by food and energy costs and a drop in the rupee, curbing Subbarao’s scope to counter the slowest economic expansion in almost a decade.

Bonds – Bond auction holds this week, we expect a fairly stable trend and a possible sell-off ahead of the auction to explore opportunities of reinvesting at higher yields.

Bills – Relatively stable and flat session in the bills market on Monday. Low demand recorded yesterday due to volatility in the cash market. Active session ahead today as the last issued 1yr t-bill will be listed in the secondary market.

Money Market – OBB flat at 16.00% and O/N rate up 200bps to close at 18.00% yesterday, cash market remains tight and illiquid.

CBN CUT- OFF RATE – $/NGN 155.83

                           Hi                   Low         Close        Prev.Close
USD/NGN   158.80/90    157.61/71    157.70/80    158.30/40

Interest rates

NIBOR (%)                        LIBOR (%)
O/N                  18.1667         USD 1 month             0.2395
7 Day                18.6250        USD 2 month            0.3330
30 Day             19.1250         USD 3 month            0.4345
60 Day             19.5417          USD 4 month           0.5389
90 Day             19.9167          USD 6 month           0.7192
USD 12 month          1.0460
Y/Y Consumer Inflation June 2012 :                        12.9%
FX Reserves: 10 August 2012 (USD bn)                   36.511
MPR                                                                                 12.00%

Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria,

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