Financial market products & services update

Financial markets.

Financial markets.

21 July 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Nigerian Exports Promotion Council (NEPC) and the Nigerian-British Chamber of Commerce (NBCC) have sealed a Memorandum of Understanding (MoU) to increase the level of trade between Nigeria and the United Kingdom to about N4.5 trillion by 2020. The pact, according to NEPC, would see both countries coming up with deliberate strategies to boost the level of non-oil exports owing to the decline in oil revenue as well as boosting the volume of bilateral trade from the £8 billion (N2.4 trillion) as of the end of 2014 to £15 billion (N4.57 trillion) by 2020. The Executive Secretary of NEPC, Olusegun Awolowo, signed the MoU on behalf of the council, while the President of NBCC, Mr. Dapo Adelegan, signed on behalf of the chamber. Awolowo said the agency has been at the forefront for diversifying the Nigerian economy, noting that this had been further reinforced by the recent decline in the price of oil in the global market. While admitting that the drop in the price of oil has led to reductions in government revenue with pronounced negative effects on different sectors of the economy, he said the NEPC has identified 13 National Strategic Export Products to replace oil. The 13 products include palm oil, cocoa, cashew, sugar, rice, iron ore, metals, aluminium and auto parts.

FIXED INCOME: Risk on was the main theme of Thursday (but we do not expect this trend to persist). Locals were decent buyers of risk following the bond auction stop rates. The Feb 2020s and July 2034s were the most active for locals. Aug 2016s saw offshore account offload a sizeable amount. Bills market turned slightly bullish on improved system liquidity – N124bn OMO maturity on Thursday. MPC meeting this week (after the break) where we expect the MPR to be left unchanged at 13%.

FX: No significant change in the market as the two way quote FX market remains shut. Special auction funds remained at 195.95/196.95 on Thursday.

COMMODITIES: Brent held losses near a two-week low amid a broader rout in commodities as Iran’s plan to regain market share bolstered speculation a global glut will persist. Brent for September settlement was at $56.52 a barrel on the London-based ICE Futures Europe exchange, down 13 cents, at 2:33 p.m. Singapore time.

UK: Chancellor of the Exchequer George Osborne will announce Tuesday that he’s seeking a further 20 billion pounds ($31 billion) of savings from U.K. government departments ahead of a spending review. Chief Secretary to the Treasury Greg Hands wrote to ministers asking them to identify efficiencies and reforms, the Treasury in London said in a briefing note. The cuts will be detailed in the spending review on Nov. 25.

EUROPE: Greece repaid about 6.8 billion euros ($7.4 billion) to creditors, as depositors queued at reopened banks in the first signs of normality after last week’s bailout deal. The European Central Bank and the International Monetary Fund both confirmed receipt of money owed, and a Greek Finance Ministry official said earlier that the country ordered payments to both those institutions and its central bank. The disbursements close one chapter on Greece’s debt crisis after five months of bailout talks that culminated in a frenzy of last-minute negotiations a week ago to meet the Monday deadline. While banks reopened Monday, Greek financial markets will remain closed at least through Wednesday, two officials said. News of the impending payment helped push the euro higher earlier. The currency was up more than 0.1 percent at $1.0842 as of 6:59 p.m. Frankfurt time.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.00%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.955

Money Market Highlights
O/N                                   9.4583
30 Days                           14.6645
90 Days                           16.0898
180 Days                         16.9052

USD 1 Month                 0.1890
USD 2 Months               0.2425
USD 3 Months               0.2950
USD 6 Months               0.4022
USD 12 Months             0.7328

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           15-Oct-15           14.03
182d         07-Jan-16         13.80
364d        02-Jun-16         14.36
2yr            27-Apr-17         14.88
3yr            29-Jun-19        15.12
5yr            13-Feb-20        15.03

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         197.00      199.50
EURUSD       1.0750      1.0952
GBPUSD       1.5468      1.5670
USDJPY        124.33      124.36
USDCHF       0.95635   0.9565
GBPEUR       1.4245      1.4449
USDZAR      12.3045     12.5079
JPYNGN      162.9597   163.0603
CHFNGN       211.15      212.84
EURNGN       220.69    222.05
GBPNGN        306.99   308.39
ZARNGN          15.11      17.03

About the Author