Financial market products & services update

*Financial markets.

*Financial markets.

14 December 2015, Sweetcrude, Houston – Local and international financial market products and services update.

NIGERIA: One of the big three global credit rating agencies, Moody’s Investors Service, has affirmed Nigeria’s Ba3 issuer rating with a stable outlook. The affirmation of the Nigeria’s rating, according to the global credit rating agency, was based on the strength of the federal government’s balance sheet, despite budgetary pressures stemming from the current low oil price environment; the country’s robust medium-term real Gross Domestic Product (GDP) growth prospects, despite the current economic slowdown; and the successful presidential election that has provided an opportunity for the country to improve institutional strength and governance. Commenting on Moody’s rating, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, said it was an “attestation that Nigeria is dealing with the challenges posed by the global drop in commodity reasonably well”:
– CBN to sell NGN 1.2 trillion Treasury Bills in Q1 2016
– Tiger Brands to sell 65.7% of TBCG in Nigeria to Dangote
– CBN proposes NGN 300 billion intervention fund for agric
– A total inflow of about N890 billion is expected to hit the money market from the various maturing government securities and Federation Account Allocation Committee (FAAC) this month
– CBN halts branch operations by BDC’s

SOUTH AFRICA: South African President Jacob Zuma named his second finance minister in four days after criticism from business groups and his own party, Sparking a rebound in the rand and bonds.

CHINA: Growth in industrial value added picked up to 6.2% y/y from 5.6% y/y in October, beating market expectations of 5.7%. Fixed asset investment (FAI) growth remained flat at 10.2% y/y as of end-November. However, property investment growth decelerated further to 1.3% y/y YTD from 2.0%. Nominal retail sales remained solid, growing 11.2% y/y in November, compared to 11.0% in October (real growth stayed unchanged at 11.0% y/y as inflation edged up). Supportive policy measures appear to be boosting investment; however, we think producers need more time to react to the demand pick-up.
FX: CBN intervention rate remains at $/NGN 197.00
FIXED INCOME: Market was bullish on Friday, t-bill much more active compared to Thursday as market players were forced to deploy their excess cash to short dated bills, as CBN hadn’t announced another OMO auction. Bonds were relatively active but not much happened, auction result was being expected by the market. The result whispers are 10.952% for 20s and 11.00% for 24s. Average t-bill yield is now at 3.37% while average bond yield at 9.80%. O/n closed at 1%.

COMMODITIES: Oil has slumped to levels last seen during the global financial crisis as the Organization of Petroleum Exporting Countries effectively abandoned production limits to defend market share, fueling a record surplus. The glut will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output.

FIXED INCOME: Market opened this week on a subtle note with less volatility and last week’s very wide bid/offer spread started to close up. Actual trades were few and far between, and skewed to the left hand side for both T-bills and Bonds. T-bill yield moved up 12bps with the average now at 2.55%. Bond yield moved up 24bps with the average now at 10.02%. Money Market liquidity is NGN539bn and O/N is still at 1%.

COMMODITIES: Oil retraced some losses after the biggest monthly decline since July as the Organization of Petroleum Countries showed few signs of slowing its production heading into this week’s policy meeting. OPEC pumped 32.12 mill bbls/day in November, keeping output above its quota for an 18th month.

Macro Economic Indicators
Inflation rate (Y-o-Y) for October. 2015            9.30%
Monetary Policy Rate current                             11.00%
FX Reserves (Bn $) as at December 7, 2015    29.597

Money Market Highlights

O/N                                 0.9583
30 Day                            8.8918
90 Day                          10.6733
180 Day                        12.7228
USD 1 Month               0.3305
USD 2 Months             0.4240
USD 3 Months             0.5120
USD 6 Months             0.7465

Benchmark Yields
Tenor         Maturity        Yield (%)

91d                3-Mar-16            2.20
182d              2-Jun-16            5.54
364d             1-Dec-16             6.85
2y                 27-Apr-17           10.15
3y                29-Jun-19           10.92
5y                13-Feb-20           11.46

Indicative Currency Exchange Rates
                            Bid          Offer
USDNGN        197.50         199.50
EURUSD        1.0950         1.0960
GBPUSD        1.5160          1.5170
USDJPY         121.00         120.00
USDCHF        0.9850       0.9860
GBPEUR        1.3800        1.3810
USDZAR          15.03          15.00

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