Financial market update

26 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The prospect of getting loans locally are no longer bright following a policy by the CBN to shut out non-repaying debtors from further credit, airlines in the country are now considering finance options overseas to strengthen their operations. Some of the airlines in this category are said to be owing combined debts of $737 million to the Asset Management Company of Nigeria (AMCON). The CBN had on Friday last week stopped commercial banks in the country from granting additional loans to the nation’s airlines over their massive outstanding debts.

EUROPE: European stocks slid amid skepticism global stimulus will revive growth before reports expected to show the debt crisis’ deepening economic impact. The Stoxx Europe 600 Index declined 0.8 percent yesterday, with more than 30 shares dropping for each that gained. Europe’s benchmark gauge has rallied 17 percent from this year’s low on June 4 as European Central Bank policy makers agreed to implement an unlimited bond-buying program and the Fed unveiled a third round of asset purchases.

CHINA: China’s stocks fell, with the Shanghai Composite Index briefly sliding below the 2,000 level for the first time in three years, on concern the deepening economic slowdown is hurting corporate profits. The Shanghai Composite dropped 1.2 percent to 2,004.17 at the close, after slumping to as low as 1,999.48 in the last five minutes of trading. The gauge has lost 9.9 percent this quarter, the most in a year, and is the worst performer among global markets after Cyprus.

Bonds – Bond yields recovered in Tuesday’s session down 20bps on the average, the 2017’s and 2022’s put up a strong performance off 42bps and 69bps respectively due to renewed local interests. Offshore demand remains weak but expect this to strengthen into the new month next week.

Bills – Light demand recorded in the bills market on Tuesday after no sale at the last two OMO auctions. Another auction conducted yesterday with ngn14.5 bio sold out of an offering of ngn100 bio, there will be a primary auction today which should reduce trading activities till after results are published.

Money Market – OBB and O/N rate up 50bps to at 11.00%, ngn14.50 bio outflow via OMO issuance.

                             Hi              Low          Close          Prev.Close
USD/NGN    157.75/85     157.52/62   157.60/70   157.75/85

Interest rates
NIBOR (%)                    LIBOR (%)
O/N              10.5833      USD 1 month             0.2155
7 Day            11.1667       USD 2 month             0.2943
30 Day         12.1667       USD 3 month             0.3635
60 Day         12.6667       USD 4 month            0.4644
90 Day         13.0000      USD 6 month            0.6457
USD 12 month          0.9783
Y/Y Consumer Inflation July 2012 :                   12.8%
FX Reserves: 20 September 2012 (USD bn)     40.900
MPR                                                                           12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

About the Author