Financial market products & services update

*Financial markets.

*Financial markets.

16 February 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The Nigerian National Petroleum Corporation (NNPC) is in talks with oil majors and banks to raise capital for new drilling and to repay up to $4 billion in debt that the state oil company has accumulated over years of mismanagement, the Group Managing Director of NNPC, Dr. Ibe Kachikwu, has told Reuters.
Kachikwu, who is also the Minister of State for Petroleum Resources, said he wants to increase output to up to 2.5 million barrels a day by the end of 2016. Currently, Nigeria pumps 2.3 million barrels a day.
President Muhammadu Buhari has made reforming the oil sector a priority as a slump in oil prices hammers the economy. The former military ruler fired the NNPC board and appointed Kachikwu to overhaul NNPC whose opaque structures allowed corruption and oil theft to flourish.

FIXED INCOME: This week started with a quiet session yesterday in Bonds. T-bills saw a bit of demand with the absence of any OMO auction.
Money market liquidity reduced to N380bn from N522bn on Friday possibly because of CRR debits. The new 10year bond (Jan 2026s) that was issued in January, will be listed as benchmark (for active trading) from today.

FX: The CBN weekly Special auction for this week is expected to hold on Thursday as we expect the CB to make announcement today.

COMMODITIES: Brent crude advanced above $34 a barrel as Saudi Arabia is said to meet with Russia in Doha on Tuesday to discuss the market.
Futures climbed as much as 4.3% in London, rising for a third day. The increase boosted shares of Asian energy companies, which led gains in equities across the region. Saudi Arabia’s Oil Minister Ali al-Naimi will speak with his Russian counterpart Alexander Novak in the Qatari capital, according to a person familiar with the talks, who asked not to be identified because they are private. Venezuela will also attend and the person didn’t say what the agenda of the meeting will be.

INDIA: India’s rupee declined as a selloff in Asian currencies exacerbated concern that global investors will dump the nation’s assets as they head for safer ground.
Foreign holdings of rupee-denominated debt have fallen by 26 billion rupees ($379 million) in the last five trading days, data from National Securities Depository Ltd. show, while stocks have seen withdrawals of $2.2 billion this year. A measure of Asian exchange rates retreated by the most in more than a month on Tuesday. Government bonds fell, with the yield on notes due January 2026 rising two basis points to 7.77%, prices from the central bank’s trading system show.

CHINA: China’s cabinet has discussed lowering the minimum provisions that banks must set aside for bad loans, a ratio that is currently set at 150% of nonperforming debt, people familiar with the matter said.
The China Banking Regulatory Commission would be responsible for deciding the timing and magnitude of any reduction, said the people, asking not to be identified as the deliberations are private. Some big banks have already used a ratio of around 120% for their 2016 budgeting, two of the people said.
A rapid increase in soured loans has put banks’ bad-loan coverage ratios close to the minimum 150% level and dragged on their profits.

Macro Economic Indicators
Inflation rate (Y-o-Y) for December 2015                       9.55%
Monetary Policy Rate current                                          11.00%
FX Reserves (Bn $) as at February 10, 2016                 27.839

Money Market Highlights

O/N                                 1.0000
30 Day                            7.9656
90 Day                            9.6942
180 Day                         11.2644
USD 1 Month                0.4305
USD 2 Months              0.5160
USD 3 Months              0.6182
USD 6 Months              0.8578

Benchmark Yields
Tenor     Maturity      Yield (%)

91d           26-May-16       3.98
182d         11-Aug-16         7.51
364d        02-Feb-17        9.29
2y             31-Aug-17       10.37
3y             30-May-18     10.65
5y             13-Feb-20       12.00

Indicative Currency Exchange Rates
Bid        Offer

USDNGN      197.00       199.50
EURUSD       1.1056       1.1256
GBPUSD       1.4343       1.4543
USDJPY        114.41        114.45
USDCHF       0.98225   0.9925
GBPEUR       1.2844      1.3048
USDZAR       15.6131     15.8165

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