Financial market products and services update

Financial markets12 May 2014, Sweetcrude, Houston, Texas – Local and international Financial market products and services update.
NIGERIA: The Petroleum Industry Bill (PIB) in its present form is too complex for a country like Nigeria and may need to be broken into a manageable state to have an easier chance of passage before the National Assembly, says Diezani Alison-Madueke, Minister of Petroleum. The PIB aims to unify all the necessary legislations in one bill and provide a clear framework for investment in Nigeria’s energy sector.

The new one year bill issued at last week’s auction began trading in the secondary market on Friday and closed about 30bps lower than its cut-off rate at the last auction. This was in line with the move seen on the rest of curve, rallying by about 10-40bps with more weight in the longer end. The average yield on the bill curve is now 10.90%, and as such we see limited room for further compression especially in the shorter dates. Bond market continued to witness strong demand from locals’ especially on the June 2022s and March 2024s witnessing a 12bps rally. We expect the rally in the bond market to slow ahead of this week’s bond auctions where the DMO will be reopening both 2016 and 2024 bond (35bn each).”

COMMODITIES: West Texas Intermediate was steady in New York. WTI for June delivery was up 13 cents at $100.12 a barrel in electronic trading on the New York Mercantile Exchange.

FX: On Friday, we opened to a slight uptick in rates with the bulls dominating in the early trading hours, but the pair was capped at 160.50 as we retraced almost immediately. The move down took us below 161, though this was short-lived as payers emerged to take advantage of the rather attractive lows. The pair eventually settled at 161.00-161.20, as we traded the range for a while. A late appreciation of rates turned out to be unsustainable with sellers emerging at the 161.35/45 level to ensure we retraced towards opening levels again to eventually close for the week at 161.15/25. Expected offshore participation at the bond auctions this week should provide enough support for the pair to mitigate the depreciation pressure post the oil flow period, seeing the next resistance at 161.80-162 and support at 160.40-60.

US: The U.S. economy should accelerate in the second quarter to an annual growth rate of 3 percent or more, but it may not be clear for some time if the pick-up is sustainable, a Federal Reserve official said on Sunday. Federal Reserve Bank of Atlanta president Dennis Lockhart also said he expected the U.S. central bank to have run down its bond-buying program by its October or December meeting and to start raising interest rates in the second half of next year. The U.S. economy hardly grew in the first quarter but has gathered pace since. Philadelphia Fed President Charles Plosser said on Thursday he expected full-year growth of 3 percent.

CHINA: China’s fiscal revenues in April rose 9.2 percent from a year earlier to 1.2 trillion Yuan ($192.7 billion), the Ministry of Finance said on Monday, quickening from a rise of 5.2 percent in March. Fiscal revenues in the first four months rose 9.3 percent from the same period last year to 4.8 trillion Yuan, the ministry said in a statement. China’s fiscal expenditures rose 9.6 percent in the first four months from a year earlier to 4.0 trillion Yuan, the ministry said. It did not give a spending figure for April alone.

Macro economic Indicators
Inflation rate (yoy) for Mar. 2014    7.8%
Monetary Policy Rate current           12%
FX Reserves (Bn $) as at May. 05    37.958

Money Market Highlights

O/N                                 10.6250
30 Day                            12.4890
90 Day                            13.2209
180 Day                          14.0581
USD 1 Month                  0.1516
USD 2 Months                0.1913
USD 3 Months                0.2241
USD 6 Months                0.3224
USD 12 Months              0.5402

Benchmark Yields
Tenor             Maturity          Yield

91d                    07-Aug-14           9.75
182d                  09-Oct-14          10.43
364d                 23-Apr-15           11.79
2y                      16-Aug-16           12.03
4y                      31-Aug-17           12.04
5y                      29-Jun-19           12.17

Indicative Currency Exchange Rates
                        Bid     Offer
EURUSD     1.3723    1.3825
GBPUSD     1.6824    1.6927
USDJPY      101.88    101.91
USDCHF     0.8809   0.8911
GBPEUR     1.1931     1.2033
USDZAR     10.2547  10.4608
USDNGN    160.85    161.55
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
    161.40/50   160.85/95   161.15/25     160.90/00

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