Financial market update

Financial markets02 May 2014, Sweetcrude, Houston, Texas – Local and international financial market products and services update.
NIGERIA: The Federal Government has set up a committee to study and implement the merger of the Nigerian Civil Aviation Authority (NCAA), the Nigerian Airspace Management Agency (NAMA) and the Nigerian Meteorological Agencies (NIMET) which will become the Federal Civil Aviation Authority (FCAA). This is in tune with the recommendation of the Steve Oronsanya committee, which was charged with the task of pruning Federal Government parastatals to reduce the bloated workforce and make them more productive. The committee will also study the merger plan and see whether it is in conflict with the international aviation agreements Nigeria has with international air transport organisations like the International Civil Aviation Organisation (ICAO), the US Federal Aviation Administration (FAA) and others.

FIXED INCOME: It was the end of an impressive month and also another trading day where the CBN did not conduct any OMO auction. Wednesday’s session was yet again skewed to the buyers. The tbill curve was dragged lower by an average of 21bps with most of the pressure on the mid – long dated bills. A quick recap of a very busy month – Nigeria’s GDP rebasing resulted in the debt to GDP ratio falling to 11% from 19%. The month opened with average yields on tbills at 13.27% closing at 11.13% while on bonds – from 13.80% to close at 13.05%, with the greatest move (253bps) across the curve seen in the 1-year space.

COMMODITIES: West Texas Intermediate headed for a second weekly decline as crude stockpiles at a record high expanded further in the U.S., the world’s biggest oil consumer. WTI for June delivery was at $99.40 a barrel in electronic trading on the New York Mercantile Exchange, down 2 cents.

FX: It was a quiet NGN day on Wednesday, trading was around the 160.50 levels again; however it failed a convincing break as we only traded a 160.45 low before retracing to close at 160.60/70. The slight under-utilization should ease signals from Monday’s auction that sizeable dollar demand was again present in the market. It is important to note that the 160.50 level appears to be weak and a clear break would push the pair for a run to 160.00. Resistance is at 161.00.

CBN RDAS AUCTION: The CBN offered the usual $400 million at Wednesday’s RDAS auction and sold $338.8 million with marginal rate maintained at 155.73 (1% commission excluded); Amount sold was much less than Monday’s figure (which was approx 99.9% utilized).

U.S. hiring likely increased at its quickest pace in five months in April, which would bolster hopes of a strong rebound in economic activity in the second quarter. Employers probably added 210,000 jobs last month after increasing headcount by 192,000 in March, according to reports. That would also top the pace of payrolls gains in the first quarter of 177,667 jobs per month. The unemployment rate is forecast falling one-tenth of a percentage point to 6.6 percent in April, matching a five-year low previously touched in January.

Activity in China’s factories increased marginally in April but export orders fell sharply, a government survey showed on Thursday, adding to questions about whether the world’s second-largest economy is stabilizing after its first-quarter slowdown. The data came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures taken over the past month on concerns that the economy may be losing momentum more quickly than expected.

Macro Economic Indicators
Inflation rate (yoy) for Mar. 2014        7.8%
Monetary Policy Rate current              12%
FX Reserves (Bn $) as at Apr. 29        38.148

Money Market Highlights

O/N                                 10.5417
30 Day                            12.4844
90 Day                            13.2176
180 Day                          14.2554
USD 1 Month                 0.1505
USD 2 Months               0.1890
USD 3 Months               0.2229
USD 6 Months               0.3220
USD 12 Months             0.5475

Benchmark Yields
Tenor         Maturity          Yield

91d               31-Jul-14             10.34
182d            09-Oct-14            10.90
364d           23-Apr-15            12.08
2y                16-Aug-16            12.50
4y                31-Aug-17            12.49
5y                29-Jun-19            12.56

Indicative Currency Exchange Rates
                            Bid         Offer
EURUSD        1.3804        1.3906
GBPUSD         1.6841        1.6943
USDJPY          102.465     102.495
USDCHF         0.8751        0.8853
GBPEUR         1.1931        1.2033
USDZAR        10.4032     10.6093
USDNGN        160.30       161.00
JPYNGN         1.5707        1.7207
CHFNGN       187.26        192.86
EURNGN       227.56        232.76
GBPNGN       273.06        278.26
ZARNGN        14.32          18.12

                              Hi               Low            Close        Prev.Close
USD/NGN   160.75/85    160.40/50    160.60/70    160.50/60

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