22 April 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s government revenues fell in March to 299 billion naira ($1.50 billion), down from 345.095 billion naira ($1.73 billion) in February, due to low oil prices, the finance minister said on Thursday. “The federation accounts receipts are among the lowest in recent memories. We are looking at 299 billion this month and that is because of the very low oil pricing,” Finance Minister Kemi Adeosun told reporters. Adeosun said that the rainy day fund, the Excess Crude Account, stood at $2.3 billion, up slightly from $2.26 billion. Nigeria, Africa’s biggest economy and the continent’s top oil producer, relies on crude sales for about 70% of government revenues and has been hit hard by the sharp fall in global crude prices since mid-2014. Many states have been unable to pay public salaries in time or fund infrastructure projects and other state services.
FIXED INCOME: The entire bill curve re-priced higher following Wednesday’s auction results but we did not see players hitting the bids. Yield on the short dated bills (<35days) moved the most (average +161bps) as they had closed at overdone levels on Wednesday. Bond yields also opened north yesterday but we saw some short covering. O/N rates inched higher to close at 6% because of the weekly CRR maintenance cycle. We expect to see some more demand filter into bond and T-bills to close the week.
FX: The CBN held its weekly special intervention yesterday. The intervention rate was maintained at $/NGN 197.00 and we expect results early next week.
CHINA: Chinese speculators have a new obsession: the commodities market.
Trading in futures on everything from steel reinforcement bars and hot-rolled coils to cotton and polyvinyl chloride has soared this week, prompting exchanges in Shanghai, Dalian and Zhengzhou to boost fees or issue warnings to investors. While the underlying products may be anything but glamorous, the numbers are eye-popping: contracts on more than 223 million metric tons of rebar changed hands on Thursday, more than China’s full-year production of the material used to strengthen concrete.
E.U: Mario Draghi’s boost to European corporate bonds may end as quickly as it began.
The European Central Bank on Thursday announced wider-than-expected criteria for a debt-buying program, sparking a drop in credit risk and giving a second wind to the biggest corporate-bond rally in more than three years. Some money managers are beginning to ask whether the gains can last given the challenges the central bank faces buying significant amounts of debt in an illiquid market.
COMMODITIES: Oil is poised for a third weekly advance as producers signal the door is still open for an accord on limiting supplies after a proposal to freeze output failed on Sunday.
Futures rose as much as 1.6% in New York, and are up 8.2% this week. OPEC countries will return to the idea of freezing output and may hold talks with other nations, Secretary-General Abdalla El-Badri said. Discussions in Doha on Sunday failed after Saudi Arabia said it wouldn’t restrain supplies without commitments from all members including Iran, which has ruled out a cap for now.
Macro Economic Indicators
Inflation rate (Y-o-Y) for March 2016 12.80%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at April 19, 2016 27.308
Money Market Highlights
30 Day 8.8826
90 Day 11.0785
180 Day 12.7406
USD 1 Month 0.4412
USD 2 Months 0.5275
USD 3 Months 0.6351
USD 6 Months 0.9041
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 21-July-16 6.83
182d 20-Oct-16 9.19
364d 6-Apr-17 10.34
2y 31-Aug-17 11.34
3y 30-May-18 11.71
5y 13-Feb-20 12.78
Indicative Currency Exchange Rates
USDNGN 197.50 199.50
EURUSD 1.1162 1.1364
GBPUSD 1.4259 1.4460
USDJPY 110.67 110.70
USDCHF 0.97175 0.9817
GBPEUR 1.2650 1.2854
USDZAR 14.2387 14.4424
JPYNGN 179.9697 180.1103
CHFNGN 204.38 206.07
EURNGN 224.51 225.88
GBPNGN 285.77 287.17