Financial market products & services update

Coins on a graph

Coins on a graph

12 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.

NIGERIA: The apex bank warned banks on the dire consequences of the falling oil prices on loan advances to the oil and gas sector, as well as the public sector. CBN Director, Banking Supervision, Mrs Tokunbo Martins, said the falling oil prices and the potential for a further decline has been a major concern in recent times. She said considering the quantum of exposure to the oil and gas sector, combined with risk management deficiencies revealed by the recent Risk Based Supervision exercise, there is a need to proactively guard against a crystallization of these risks. The CBN has postponed an earlier directive that deposit money banks should strengthen their capital buffers in order to mitigate shocks as a result of their exposure to the oil sector.

FX: There was some improvement in volume of interbank transactions this week. The market rumoured CBN’s intervention which has kept the pair relatively subdued. Market remain strictly flow driven and we expect the typical mid-month pressure to start building up next week especially as oil price continue to look softer while US’ continued economic recovery would likely imply more pressure on the equity market.

FIXED INCOME: Mixed bag last week in both Tbill and bond market. All in all, it was an eventful first week of the year. Weeks coming up will tell how the news of the MDAs closing accounts with commercial banks will play out but for now no immediate effect expected. All eyes on the bond auction on Wednesday as everyone tries to position for the New Year.

INDIA: Companies in India are being upgraded at the fastest pace in five years as Prime Minister Narendra Modi’s efforts to revive economic growth bear fruit. Earnings of companies listed on India’s benchmark Sensex are expected to increase an average 26.5 percent over the next 12 months versus 10.8 percent for the MSCI Emerging Markets Index, Bloomberg data show.

CHINA: China’s vehicle sale is forecast to expand 7 percent this year as the economy cools in the world’s largest car market. Total deliveries may exceed 25.1 million vehicles, from 23.5 million last year, the state-backed China Association of Automobile Manufacturers said today in Beijing. That compares with 6.9 percent growth last year and 14 percent in 2013, with the market continuing to add the equivalent of an entire year’s auto sales in some smaller developed markets such as France or South Korea.

COMMODITIES: Oil extended losses from the lowest level in more than 5 years. Venezuela called on OPEC producers to work together to spur a recovery.

Futures slid as much as 2.9 percent in London after a seventh weekly drop. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts. Prices need to return to $100 a barrel for economic equilibrium, Venezuelan President Nicolas Maduro said in Iran during a tour of Middle East members of the Organization of Petroleum Exporting Countries.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                  7.90%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at December 31 2014  34.488

Money Market Highlights
O/N                                 9.9583
30 Days                         13.9864
90 Days                         14.5006
180 Days                       15.6936

USD 1 Month                 0.1667
USD 2 Months               0.2147
USD 3 Months               0.2541
USD 6 Months               0.3619
USD 12 Months             0.6264

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           09-Apr-15       11.21
182d         25-Jun-15       14.28
364d         17-Dec-15       15.59
2yr            16-Aug-16       15.20
3yr            27-Apr-17       15.35
5yr            23-Oct-19       15.25

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         180.00      186.00
EURUSD       1.1705       1.1907
GBPUSD       1.5004       1.5206
USDJPY        118.85        118.88
USDCHF       1.01225      1.0224
GBPEUR       1.2694       1.2898
USDZAR       11.3991      11.6810
JPYNGN         N/A           N/A
CHFNGN        N/A           N/A
EURNGN        N/A           N/A
GBPNGN        N/A            N/A
ZARNGN        N/A            N/A

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