Financial market update

26 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Asset Management Corp. of Nigeria, set up by the government to buy bad debts from the nation’s lenders, plans to appoint advisers next month to help with the sale of three nationalized banks, Chief Executive Officer Mustafa Chike-Obi said. Amcon is planning to sell Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd. the agency said in March.

EUROPE: European stocks fell for a third day on concern that a summit of the region’s leaders this week will not lead to decisive measures to contain its debt crisis as Germany’s Angela Merkel hardened her resistance to debt sharing. The Stoxx Europe 600 Index retreated 1.5 percent to 242.82 at the close of trade yesterday, extending its decline in the last three days to 2.7 percent and erasing the gauge’s advance for the year.

CHINA: China’s economy needs “structural change” to encourage consumers to spend more to allow it to weather the global economic slowdown, according to Ronnie Chan, chairman of Hong Kong-based Hang Lung Properties Ltd. Cash-strapped Chinese developers are reluctant to buy land after government curbs in place since 2010 to prevent a property bubble tightened credit, draining liquidity. Hang Lung’s cash ratio, a measure of liquidity for developers, was 2.66 at the end of 2011, the second-highest among the 50 biggest Hong Kong- listed builders tracked by Bloomberg.

Bonds – Ahead of the auctions this week market was bearish on Monday, yields inching up between 4-7bps across the curve. Expectation is that we will see yields cut above 16.00% at the primary auction on Wednesday.

Bills – The short dated maturities saw some demand come in to pull rates down while the longer dated bills from about 300days and above were sold ahead of the bill auction where the one year is expected to close higher than the last primary level.

Money Market – OBB and unsecured O/N rates trended down to 14.50% & 15.50% yesterday as the market accessed the CBN window as it wasn’t a WDAS funding day. Liquidity levels still low, the market awaits the FAAC inflow.

CBN WDAS AUCTION
 
Offered:  $350mio                   Sold: $350mio
Marginal rate: 155.91
Weighted average: 155.97
No. of Banks:21

FX
                         Hi                Low           Close    Prev.Close
USD/NGN 163.27/37  162.65/75  162.65/75  162.40/50