Financial market products & services update

*Financial markets.

*Financial markets.

20 May 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The Central Bank of Nigeria (CBN) has disclosed that the non-performing loan (NPL) ratio of the banking industry rose to N649.63 billion as the capital adequacy ratio has weakened. This was contained in the apex bank’s financial stability report for the period ended December 2015. The apex bank in the report released yesterday said: “ratio of regulatory capital to risk-weighted assets stood at 17.5 per cent as at December 2015, showing a marginal increase of 0.1 percentage point below the level in June 2015.” According to CBN, the decline was attributable to the fall in the level of banks’ general reserves in the second half of 2015. The level of nonperforming loan to capital in the banking industry, however, increased to 7.4 percent by the end of 2015 from 5.5 percent which it was at the end of June 2015.

FX: The CBN weekly Special intervention auction held yesterday – we await results. The intervention rate was maintained at $/NGN 197.00.

FIXED INCOME: The sell off cooled off yesterday following a series selling sessions. There was some renewed interest in both t-bills and bonds market, PFAs showing interest in 26s and 36s and also the long end of the t-bill curve. Traded volumes are still low as the general uncertainty in the economy and MPC decision next week still dousing market appetite. Average t-bill yield now 9.71% from 9.75% while average bond yield now 13.71% from 13.84%. O/N closed 12% with liquidity still relatively tight.

U.K.: Downing Street has sought to play down figures showing that EU workers in the UK have risen to a record 2.1 million. European workers now make up 6.8% of Britain’s workforce of 31.5 million, according to recent figures from the Office for National Statistics (ONS). Supporters of the Vote Leave campaign said the latest numbers were evidence of “uncontrolled migration”. But the prime minister’s office said the broader point was that the UK economy was growing. The number of EU workers in the UK workforce has risen by 224,000 in the past year, an increase of 11.7%. During the same period, the overall UK workforce has increased by 1.3%.

INDIA: India’s rupee was headed for its worst weekly decline since January on speculation that an increase in interest rates by the Federal Reserve will accelerate outflows from emerging-market assets. Overseas holdings of rupee-denominated debt fell to 42.8 billion rupees ($635 million) over the past four days, set for the biggest drop in 12 weeks, data showed. A gauge of developing-nation currencies was poised to slide for a third week after minutes of the Fed’s last meeting showed most officials think a June rate hike would be appropriate if the U.S economy continues to improve.

COMMODITIES: Brent crude powered back above $49 a barrel in Asia today as oil prices resumed their rise after the dollar eased and militants blew up another pipeline in African producer Nigeria. A rally that pushed oil prices to a series of 2016 highs since last week had taken a breather over the past two days after minutes of an April meeting showed that the US Fed kept the door open to raising interest rates in June, sending the dollar higher. A dollar puts downward pressure on oil, as it makes the dollar-priced commodity more expensive, curtailing demand and depressing prices.

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                            11.7100
30 Day                       12.0052
90 Day                       13.6265
180 Day                     15.1228
USD 1 Month            0.4385
USD 2 Months          0.5234
USD 3 Months          0.6356
USD 6 Months          0.9309
USD 12 Months        1.06675

Benchmark Yields
Tenor      Maturity     Yield (%)

91d            18-Aug-16      8.15
182d          17-Nov-16     10.50
364d         04-May-17    13.66
2y              27-Apr-17     12.91
3y              29-Jun-19    14.19
5y              13-Feb-20    14.15

Indicative Currency Exchange Rates
Bid        Offer

USDNGN        198.62      199.32
EURUSD         1.1122       1.1324
GBPUSD         1.4461       1.4663
USDJPY          110.23       110.26
USDCHF         0.98525   0.9954
GBPEUR         1.2873       1.3077
USDZAR         15.6539     15.8573

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