Financial market products & services update

*Financial markets.

*Financial markets.

09 August 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The federal government has set machinery in motion to raise $1 billion from International Capital Market in 2016, the Debt Management Office, DMO, has disclosed. The DMO in a statement on its website said it is seeking two lead managers and a financial adviser to organise the issuance of $1 billion Eurobonds this year. The $1billion sale is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018.

FX: Trading via the order book system started yesterday with mostly firm bids seen. The indicative opening range – $/NGN 319.50- 330.50.

FIXED INCOME: More demand seen yesterday in the T-bill market but it was nothing aggressive. There were minimal activity in bonds and it was skewed to the buyers. We expect tone in both markets to still remain calm today. O/N rates closed unchanged at 15%. Average yield on bills now 17.85% (- 50bps) and bonds 15.26% (-13bps).

INDIA: India’s central bank Governor Raghuram Rajan left interest rates unchanged at his last policy review as food prices threaten to push inflation above the nation’s target.
The benchmark repurchase rate will stay at a five-year low of 6.50%, the Reserve Bank of India said in a statement in Mumbai on Tuesday. The move was predicted by 27 of 29 economists in a Bloomberg survey, with two expecting a cut to 6.25%.
“Risks to the inflation target of 5% for March 2017 continue to be on the upside,” the statement read. “It is appropriate for the Reserve Bank to keep the policy repo rate unchanged at this juncture, while awaiting space for policy action.”

CHINA: China’s factory price deflation moderated further in July, with prices falling at their slowest pace in two years, taking pressure off the central bank to cut rates as policymakers turn their focus to structural reforms and ballooning credit.
A government-led building spree has increased demand for construction materials, but higher prices are also due in part to speculation in China’s commodities futures market, which has pushed up Shanghai rebar futures up by 50% this year.
The producer price index (PPI) fell 1.7% in July from a year ago, the National Bureau of Statistics said on Tuesday, smaller than June’s 2.6% decline. Analysts expect producer price inflation to turn positive this year for the first time in more than four years, but the recovery at the factory gate is unlikely to lead to a rebound in private investment, which has fallen to record low growth rates.

COMMODITIES: Oil dropped from the highest close in two weeks as investors weighed whether OPEC’s informal talks next month will lead to tightening supply. Delegates signaled there are no plans to revive an output freeze.
Futures slid as much as 1.1% in New York after rising 2.9% Monday. Members of the Organization of Petroleum Exporting Countries are in “constant deliberations” on stabilizing the market, said Mohammed Al Sada, Qatar’s energy minister and the group’s president. While OPEC members intend to discuss the market at the International Energy Forum in Algiers, there are no plans to revive the aborted freeze deal.

Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2016,       16.50%
Monetary Policy Rate current                   14.00%
FX Reserves (Bn $) as at Aug 04, 2016,  26.001

Money Market Highlights

O/N                            20.5067
30 Day                       17.4971
90 Day                       19.4297
180 Day                     21.8613
USD 1 Month            0.5039
USD 2 Months          0.6148
USD 3 Months          0.7924
USD 6 Months          1.1607
USD 12 Months        1.06675

Benchmark Yields
Tenor      Maturity      Yield (%)

91d             03-Nov-16      15.92
182d           02-Feb-17       19.11
364d          03-Aug-17       20.70
2y               30-May-18      17.83
3y               29-Jun-19        15.32
5y               15-Jul-21          14.97

Indicative Currency Exchange Rates
Bid           Offer

USDNGN           316.70          318.35
EURUSD           1.0993           1.1195
GBPUSD            1.2903          1.3104
USDJPY             102.30          102.32
USDCHF            0.97746        0.9877
GBPEUR            1.1619            1.1823
USDZAR            13.4435         13.6470
JPYNGN            3.097397       3.0984
CHFNGN           321.01            322.70
EURNGN           349.66           351.02
GBPNGN           412.88            414.28

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