Financial market products & services update

*Financial markets.

*Financial markets.

19 May 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria hopes to use a proposed Islamic bonds issuance programme to help fund big infrastructure needs in Africa’s biggest economy, aiming to tie the transaction to one of the several projects, a Nigerian finance official stated. Nigeria plans to borrow as much as $10 billion from debt markets, with about half of that coming from foreign sources, to help fund a budget deficit worsened by the slump in oil prices that has slashed revenues and weakened the Naira. The Federal Government is working on a sovereign Sukuk with details expected within the year as part of diversifying its funding sources, Alhaji Mahmoud Isa-Dutse, Nigeria’s permanent secretary of finance, said on Wednesday.

FX: The CBN weekly Special intervention auction holds today. The intervention rate was maintained at $/NGN 197.00.

FIXED INCOME: The bears continued domination in both t-bills and bond market, though there was a lot more price action compared to traded volumes. Market players were very concerned with protecting their bids as feelers in the market indicated that the t-bill auction would be under-subscribed even though the size on offer is small. It was pretty much the same experience in the bond market, capping prices and reduced volumes. T-bill moved up 36bps and average rate now at 9.75% while bonds moved up 27bps and the average rate is at 13.84%. Results of the auction were released with 91 days stop rates at 8.1%, 182 days at 9.2% and 364 days at 12.48%. O/N closed at 13% because of the relative tightness in liquidity.

U.S.A.: The US Federal Reserve could increase interest rates next month if the economic data support such a move, the central bank’s latest minute’s show. But policymakers suggested they thought investors had not fully accepted such a move could come that soon. The bank will look for signs the economy, employment and inflation are firming before taking action. The Fed remains wary of external factors, including a possible UK vote to leave the European Union.

JAPAN: Japan’s economy has dodged a recession after it grew faster than expected in the first three months of the year. Gross domestic product in the world’s third-largest economy grew at an annualised pace of 1.7%. The better-than-expected growth rate came after higher government spending helped to offset weakness in business investment and exports. It marks a rebound from the previous quarter but is not thought to lessen the pressure for more economic reform. Japan’s economy had shrunk in the final three months of 2015, so the expansion in the first quarter meant it avoided falling into recession – usually defined as two successive quarters of contraction. The past four quarters have been volatile, alternating between growth and contraction. In January, the Bank of Japan introduced negative interest rates in an attempt to stimulate the economy.

COMMODITIES: Oil prices are yet to reflect all of the millions of barrels of crude lost to supply disruptions, according to Australia & New Zealand Banking Group Ltd. Almost 2.5 million barrels a day of supplies have been removed from the oil market this year because of outages from Canada to Nigeria, with most of them occurring over the past month, reports said. Brent crude, the benchmark for more than half the world’s oil, has surged more than 75 percent from a 12-year low earlier this year as attacks on pipelines in Nigeria to Colombia, wildfires in Canada and a slowdown in U.S. output help curb a global glut.

Macro Economic Indicators
Inflation rate (Y-o-Y) for April 2016,       13.70%
Monetary Policy Rate current                   12.00%
FX Reserves (Bn $) as at May 17, 2016,  26.656

Money Market Highlights

O/N                          13.5800
30 Day                     11.6900
90 Day                     13.5864
180 Day                   15.3278
USD 1 Month          0.4387
USD 2 Months        0.5209
USD 3 Months        0.6251
USD 6 Months        0.9116
USD 12 Months      1.06675

Benchmark Yields
Tenor     Maturity     Yield (%)

91d           18-Aug-16      8.57
182d         17-Nov-16      10.92
364d        04-May-17     13.84
2y             27-Apr-17       13.13
3y             29-Jun-19      14.33
5y             13-Feb-20      14.41

Indicative Currency Exchange Rates
Bid        Offer

USDNGN         198.20       198.90
EURUSD          1.1114        1.1316
GBPUSD          1.4491       1.4693
USDJPY           110.14        110.17
USDCHF          0.98255    0.9927
GBPEUR          1.2908       1.3112
USDZAR          15.6594     15.8628

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