Financial market products & services update

*Financial markets.

15 February 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria will sell some national assets to reduce the burden on government budgets and help pull the economy out of recession, according to official documents, but a ministry spokesman on Tuesday disputed a reported amount. Africa’s biggest economy relies on crude oil exports to fuel its economy, but low global prices and militant attacks on the south-eastern Delta oil hub have hammered those exports and slashed government revenues. Budget ministry spokesman James Apandem said the government was finalising draft proposals in its Economy Recovery and Growth Plan document and “has no recommendation for raising that amount of revenue from the sale of assets”. A draft of the budget ministry document seen by Reuters on Saturday said, “selected national assets will be privatised to reduce the fiscal burden of the privatised institutions on the government”. But it did not identify the assets.

FX: The Naira on the parallel market further weakened against the dollar, losing 4 big figures in the first 2 days of the week. Offers for the greenback were recorded today at $/NGN 507.

FIXED INCOME: Demand in the bond market was skewed to the Jan 26s because it has the smallest size on offer tomorrow. In the bill market, street positioned for the expected N256bn maturity on Thursday. Average yield closed 12bps lower at 18.40%. We expect a strong auction today in both bills and bonds.

US: The US economy and fiscal policy face an uncertain path under the Trump administration, Janet Yellen warned yesterday as she declared “monetary policy is not on a preset course”, but that it would be “unwise” to raise rates too slowly. Testifying before Congress, the Federal Reserve chair painted a picture of an economy with accelerating growth, higher inflation and a robust labour market that has generated about 16m jobs since its post- crisis trough in 2010. She later declined to say whether the next increase would come at the Fed’s policy meetings in March or June. The dollar rose as traders focused on her remarks about the continued tightening of monetary policy. The greenback added 0.4 % against a basket of six big global currencies, reversing a loss of as much as 0.3 % earlier in the day.

GREECE: The Greek economy suffered a surprise contraction at the end of last year, reversing tentative signs of sustained growth and inflicting a fresh blow on the hopes of its international creditors. Quarterly growth fell by 0.4 % in the three months ending in December after a 0.9 % expansion in the third quarter, suggesting that the country’s bailout talks are doing nothing to help boost the real economy. Greece’s EU creditors have championed the return of economic growth in 2016, praising the left-wing Syriza government’s efforts to boost its public finances through higher taxes and reduced spending. Brussels expects the economy to bounce back strongly this year to expand 2.7 % from only 0.3 % in 2016, contingent on success in its bailout talks

COMMODITIES: Oil prices dipped on Wednesday over concerns that OPEC producers would not be able to maintain their high compliance so far with output cuts aimed at reining in a global fuel supply overhang. Brent crude LCOc1 was trading at $55.62 per barrel at 600 GMT (1 a.m. ET), down 35 cents, or 0.63 %, from its last close. U.S. West Texas Intermediate (WTI) crude CLc1 was down 37 cents, or 0.73%, at $52.83 per barrel.

Macro Economic Indicators
Inflation rate (Y-o-Y) for December 2016,     18.55%
Monetary Policy Rate current                           14.00%
FX Reserves (Bn $) as at Feb 10, 2017,           28,915

Money Market Highlights

O/N                               17.5833
30 Day                          17.0940
90 Day                          18.8354
180 Day                        23.0552
USD 1 Month               0.77000
USD 2 Months             0.84778
USD 3 Months             1.03900
USD 6 Months             1.33794
USD 12 Months           1.72400

Benchmark Yields
Tenor       Maturity       Yield (%)

91d              11-May-17        15.58
182d            10-Aug-17       18.64
364d            01-Feb-18       21.88
2y                 29-Jun-19       16.03
3y                 13-Feb-20       16.50
5y                 27-Jan-22       16.16

Indicative Currency Exchange Rates
Bid          Offer

USDNGN         314.50        315.00
EURUSD          1.0472        1.0674
GBPUSD          1.2356        1.2558
USDJPY           114.48        114.51
USDCHF          1.00235     1.0125
GBPEUR          1.1681        1.1885
USDZAR          12.9398     13.1432
JPYNGN          2.6997       2.8003
CHFNGN         311.60       313.29
EURNGN         338.92      340.28
GBPNGN         404.78      406.18

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