30 September 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Nigeria should be worried about the percentage of its revenue that goes into servicing of debts rather than the size of the debts, the World Bank has said.
The World Bank Lead Economist for Nigeria, Mr. Khwima Nthara, said this in Washington, United States, while answering questions from journalists from several African countries through video conference.
Nthara said Nigeria’s total debt profile was sustainable but added that the cost of servicing it, especially the domestic debt, was too high and out of sync with the country’s revenue profile.
He said, “Yes, debt has been on the increase, but Nigeria’s debt remains low. The debt stock has just increased from 12% to 14% of the Gross Domestic Product. The most important problem that Nigeria is facing is debt service. Nigeria has a large debt to revenue ratio, and largely most of the debt is domestic, which is crowding out the private sector.
FX: The price of contracts in the futures market finally moved as expected, the move coming almost 24hrs later than expected, following the maturity of $179.93m of the September 2016 contract. Interbank traded range for yesterday $/NGN 304.75- 316.25.
FIXED INCOME: Markets were predominantly quiet yesterday. There was no reaction in bonds to the headlines on OPEC cutting production. Tone in bills was bearish because money market liquidity is down to N6bn. We expect more of the same to continue today.
CHINA: With China’s economy stable for now and home prices in major cities soaring, analysts are dialing back forecasts for additional monetary stimulus, with some betting on a switch to tightening mode.
And as its policy framework evolves, The People’s Bank of China will make its next broad move by guiding interest rates through a corridor, rather than the traditional approach of changes to benchmark lending and deposit rates, according to a Bloomberg survey of 18 economists from Sept. 19 to 26.
MIDDLE EAST: Saudi Arabia’s foreign ministry condemned the passage of a U.S. law that would allow families of victims of the Sept. 11, 2001 attacks to sue the kingdom for damages, calling it a matter of “great concern” in a statement on Thursday.
The U.S. Senate and House of Representatives voted overwhelmingly on Wednesday to approve legislation that will allow the families of those killed in the 2001 attacks on the United States to seek damages from the Saudi government.
The foreign ministry expressed hope that the U.S. Congress would correct the legislation “to avoid the serious unintended consequences that may ensue,” without elaborating on what the consequences might be.
COMMODITIES: Refiners in the world’s biggest oil market, already struggling with a profit-sucking glut of refined fuel, face another hindrance if OPEC members cut supplies of crude.
The Organization of Petroleum Exporting Countries on Sept. 28 agreed to its first production cut in eight years, trying to support oil prices that are still down more than 50% from the highs of 2014. Pricier crude will be passed on to consumers in the form of more expensive gasoline, diesel and jet fuel, and that will dampen demand growth, Goldman Sachs Group Inc.
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 28,2016, 24.595
Money Market Highlights
30 Day 18.7872
90 Day 20.5590
180 Day 21.4160
USD 1 Month 0.5243
USD 2 Months 0.6443
USD 3 Months 0.8376
USD 6 Months 1.2336
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 29-Dec-16 18.22
182d 30-Mar-17 19.19
364d 21-Sep-17 22.16
2y 30-May-18 18.56
3y 29-Jun-19 14.63
5y 15-Jul-21 14.79
Indicative Currency Exchange Rates
USDNGN 314.00 315.00
EURUSD 1.1084 1.1287
GBPUSD 1.2854 1.3056
USDJPY 100.87 100.90
USDCHF 0.96255 0.9727
GBPEUR 1.1480 1.1684
USDZAR 13.8962 14.0996
JPYNGN 3.0797 3.1803
CHFNGN 323.17 324.86
EURNGN 351.00 352.36
GBPNGN 411.55 412.94