Financial market products & services update

*Financial markets.

*Financial markets.

15 July 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: First quarter revenues in Nigeria reached only 55 percent of what the government had targeted, the budget minister said on Thursday, blaming attacks on oil facilities in the southern Niger Delta region. “Up to April we have not been able to meet our revenue target. We have only realized 55 percent. The bulk of this constraint is the problem in the Niger Delta,” Udoma Udo Udoma told a parliamentary committee. Africa’s biggest economy, where oil sales make up around 70 percent of government revenue, is going through its worst crisis in decades due to the drop in global oil prices. Those problems have been exacerbated by attacks by militants in the Niger Delta which began in January and briefly pushed crude production in the OPEC member to 30-year lows in spring. Udoma did not provide a precise figure for first quarter revenue.

FX: Current momentum of the interbank market still maintained. Traded range narrowed to $/NGN 283.00 – 284.50.

FIXED INCOME: The buying momentum in bills strengthened yesterday with some unexpected NGN inflows but the demand was skewed to the short and mid tenored bills. In bonds, following the technical glitch observed on Wednesday, the auction was held yesterday. DMO sold N120 billion across the new 5-yr (N30 billion), 10-yr (N35 billion), and 20-yr (N55 billion) at 14.50%. 14.90% and 14.983% respectively. The 5 and 10 year were undersold by N15bn but the 20 year was increased by the same amount. This caused some buying in bonds as dealers tried to cover shorts on the ‘managed’ tenor buckets. We expect some more demand in both bonds and bills today. O/N rates closed at 14%.

U.K: The Bank of England has held the UK’s main interest rate at 0.5% despite speculation that it would cut rates. The Monetary Policy Committee (MPC) voted 8-1 to leave rates unchanged, but minutes of the meeting showed most members expect the Bank will take some action next month. Sterling rose as high as $1.3480 following the decision before falling back to $1.3312. Financial markets had priced in an 80% chance of the Bank cutting rates. The Bank said: “Most members of the committee expect monetary policy to be loosened in August. “The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.” The only member of the MPC to vote for a rate cut this month was Jan Vlieghe. Interest rates have remained on hold since the Bank cut its key rate to the record low of 0.5% in March 2009.

CHINA: China’s economy stabilized as lending and consumer spending perked up late in the June quarter, suggesting the world’s second-largest economy is responding to stepped-up government support. Gross domestic product rose 6.7 percent in the second quarter from a year earlier and in line with the government’s growth target of at least 6.5 percent for the full year.

COMMODITIES: Oil fell amid forecasts prices may slide toward $40 a barrel as consumption falters and halted supplies return. Brent for September settlement lost 67 cents to $46.70 a barrel on the London-based ICE Futures Europe exchange. The contract increased $1.11 to $47.37 on Thursday.

Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2016,          15.60%
Monetary Policy Rate current                     12.00%
FX Reserves (Bn $) as at Jul 13, 2016,      26.366

Money Market Highlights

O/N                              18.9167
30 Day                         15.2417
90 Day                         15.7597
180 Day                       16.7052
USD 1 Month              0.4814
USD 2 Months           0.5633
USD 3 Months           0.6801
USD 6 Months           0.9801
USD 12 Months         1.06675

Benchmark Yields
Tenor      Maturity      Yield (%)

91d           13-Oct-16         11.53
182d         19-Jan-17        12.80
364d        06-Jul-17         15.91
2y             27-Apr-17        14.20
3y             29-Jun-19       14.05
5y             13-Feb-20       14.28

Indicative Currency Exchange Rates
Bid          Offer

USDNGN            282.00         284.00
EURUSD             1.1045          1.1247
GBPUSD              1.3294         1.3496
USDJPY               105.94         105.97
USDCHF             0.97425       0.9844
GBPEUR             1.1916           1.2120
USDZAR             14.2143         14.4177
JPYNGN             267.4297      267.5303
CHFNGN            288.53          290.22
EURNGN            315.16           316.52
GBPNGN             378.78          380.17

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