Financial market update

11 December 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The FG is set to restart the privatization of the Afam Generating Company (GENCO) and Kaduna Distribution Company (DISCO) . The National Council on Privatization (NCP) had earlier cancelled the Afam GENCO privatization after the discovery that former Power Minister, Bart Nnaji, had a direct interest in one of the consortia that bid for the plant, while the Kaduna GENCO privatization was inconclusive because none of the prior bidders met the technical qualification criteria. [BusinessDay]

USA – Economists expect the Federal Reserve will amplify record accommodation tomorrow by announcing  $45 bn in monthly Treasury buying that will push its balance sheet almost to $4 trillion. This is an increased from the $40 bn that was currently being spent and which is expected to go on until the labor market sees significant improvement.

India – The rupee rose toward a one month high before a report that economists predict will show factory output rebounded in November Industrial production climbed 5% in Oct (YoY) after contracting 0.4% in Sep. Factory output which also increased in China during Nov is being seen as Asian economies once again improving.

Bonds – Very bullish session on Monday as a surge of demand hit the market pulling yields down across the curve. Most of the focus was on the higher priced 10.70% May 18s and the less liquid 7.00% Jun 19s which came off about 20bps. Expectation is that yields will head lower across year end.

Bills – In reaction to an OMO offer of N150 billion the market was bearish on Monday as some players took profit on low rates and tried to switch for better at the auction. Rates went up as much as 70bps on the longer dated maturities close to 364 days.

Money Market – OBB and unsecured O/N rates dipped to open the week at 10.25% and 10.50% as liquidity levels received a boost from of about N200bio being a special FAAC release payment.

CBN WDAS –  CBN offered $80mio and sold $66.05mio. The marginal rate was maintained at 157.3176 [1% commission included]. 6 banks bid at the auction.

Indicative Currency Exchange Rates
                        Bid        Offer
EURUSD      1.2948      1.2958
GBPUSD       1.6083     1.6093
USDJPY        82.35       82.75
USDCHF       0.9332     0.9352
GBPEUR       1.2420     1.2430
USDZAR       8.6600    8.7600
USDNGN      157.00     157.50
JPYNGN       1.9065     1.9565
CHFNGN      168.24     172.24
EURNGN      203.28    207.28
GBPNGN      252.50     256.50
ZARNGN      18.13         20.13

Oil declined for a fifth day in New York on concern a leadership change in Italy will disrupt efforts to curb Europe’s debt crisis. Brent bounced back briefly to $108.54/bbl pre New York hours before retracing down later. Technically speaking
$106.70/bbl is an important level on Brent

Interest rates
NIBOR (%)                    LIBOR (%)

O/N              11.2083        USD 1 month          0.2120
7 Day            11.6667        USD 2 month          0.2560
30 Day         12.5417         USD 3 month          0.3105
60 Day         12.9167         USD 6 month          0.5180
90 Day         13.2000        USD 12 month       0.8530
Y/Y Consumer Inflation October 2012 :           11.70%
FX Reserves: 30 November 2012 (USD bn)     44.47
MPR                                                                          12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria.

                            Hi             Low         Close      Prev.Close
USD/NGN  157.05/15   156.80/90 157.05/15  157.00/10

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