22 September 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Nigeria’s debt burden has increased by nearly N4trillion in the past six months, with potentials of hurting the chances of securing the much-needed foreign loans for implementing 2016 budget.
According to the Debt Management Office (DMO) data on the country’s debt released on Tuesday, Nigeria’s debt profile rose from N12.6 trillion at the end of 2015 to N16.3 trillion as at June 30, 2016.
The country’s total external debt stock, owed by states and the federal government, stood at N3.19 trillion by June 30, while domestic debt incurred by the federal government stood at N10.61 trillion.
Domestic debts taken by state governments stood at N2.5trillion, as Lagos, Delta, Cross River, and the Federal Capital Territory top the debtors list.
FX: The spot market seems to be muted and range for yesterday was $/NGN 280.00 – 345.00.
FIXED INCOME: Despite the MPC decision to hold interest rates, market rallied some more yesterday. In bonds, there was some PFA demand but market seems to be reacting more to the fact that the tightening cycle maybe coming to an end. T-Bill auction results printed 14%, 17.27% and 18.3% for 91days, 182 days and 364 days respectively. The official results and any OMO auction announcement to mop up cash from today’s maturity will drive activity.
JAPAN: The first major central bank to adopt quantitative easing in the modern era has innovated again.
BOJ Governor Haruhiko Kuroda and his colleagues adopted a pledge of “overshooting” their 2% inflation target, an idea floated by central bankers including Federal Reserve Bank of Chicago President Charles Evans, but not formally adopted up to now. They also unveiled a strategy of targeting short- and longer-term rates to provide the economy with cheap borrowing costs.
Since taking the helm in 2013, Kuroda had previously pursued a QE-on-steroids policy to shock Japan out of deflation. Yet after three and a half years, he was running into increasing concerns about the sustainability of the purchases of government bonds, which have run at about 15% of GDP annually.
U.S: Federal Reserve Chair Janet Yellen braved mounting opposition inside and outside the U.S. central bank and delayed an interest-rate increase again to give the economy more room to run.
While agreeing that the case for a rate rise had strengthened, Yellen on Wednesday argued that it made sense to put off a move for now amid signs that discouraged Americans who dropped out of the labor market are returning and looking for work.
“The economy has a little more room to run than might have been previously thought,” Yellen told a press conference in Washington after the Fed’s two-day meeting, as she explained the decision to keep rates on hold.
COMMODITIES: Oil extended gains after weekly government data showed U.S. inventories dropped to the lowest since February, trimming stockpiles at the highest seasonal level in at least three decades.
November futures rose as much as 1.2% in New York after advancing 2.9% on Wednesday. Inventories fell by 6.2 million barrels last week, according to the Energy Information Administration. A Bloomberg survey before the report forecast a 3.25 million barrel gain. OPEC members Saudi Arabia and Iran, whose rivalry derailed an oil supply accord earlier this year, met in Vienna a week before the organization holds talks in Algeria.
Macro Economic Indicators
Inflation rate (Y-o-Y) for July 2016, 17.13%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Sep 19, 2016, 24.838
Money Market Highlights
30 Day 18.5168
90 Day 19.8411
180 Day 22.4010
USD 1 Month 0.5430
USD 2 Months 0.6747
USD 3 Months 0.8658
USD 6 Months 1.2593
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 15-Dec-16 14.80
182d 23-Mar-17 18.32
364d 31-Aug-17 21.15
2y 30-May-18 17.84
3y 29-Jun-19 14.38
5y 15-Jul-21 14.61
USDNGN 314.00 315.00
EURUSD 1.1143 1.1344
GBPUSD 1.2978 1.3180
USDJPY 100.63 100.66
USDCHF 0.96405 0.9741
GBPEUR 1.1530 1.1733
USDZAR 13.2981 13.5018
JPYNGN 3.0797 3.1803
CHFNGN 324.45 326.13
EURNGN 351.00 352.36
GBPNGN 411.55 412.94