11 October 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria’s President Muhammadu Buhari has sought approval from lawmakers in the upper chamber of parliament for $5.5 billion of foreign borrowing, according to a letter read in the Senate on Tuesday. Africa’s biggest economy grew in the second quarter, climbing out of its first recession in 25 years as oil revenues rose, but the pace of growth was slow, suggesting the recovery remains fragile. Nigeria expects a shortfall of $7.5 billion in its record 7.44 trillion Naira ($24.33 billion) 2017 budget, which it plans to offset with foreign loans. The $5.5 billion of external borrowing would include $2.5 billion for plugging part of the 2017 budget deficit, and $3 billion for refinancing maturing domestic debt with dollar borrowing, to lower costs and improve the country’s debt position, the president’s letter said. “Current market conditions are considered more favourable than at the time of Nigeria’s last issuances of the Eurobond in March 2017,” said the letter.
FX: The I & E window pattern remains unchanged, with interbank trades in the tight range of $/N 359 – 360.50; demand and supply are well matched at the moment. Yesterday, turnover in the window printed at $240.54m.
FIXED INCOME: Monday’s soft tone in bonds disappeared. Day on day yield changes can be largely attributed to narrowing of bid/offer spreads mandated by the SRO (FMDQ). However, demand was evident particularly on the 2027s and 2037s from locals. Bill market was a mixed bag with no particular skew. Fixed income trade settlement issues on the rise again and could affect trading activities.
E.U: Spain maintained its hard line against Catalonia’s secession campaign after the regional leader in Barcelona stopped short of the declaration of independence his allies wanted.
Following Catalan President Carles Puigdemont’s announcement Tuesday that he’d seek talks with the government in Madrid over the future of this region, avoiding an irreversible step, the deputy prime minister in Madrid accused him of irresponsible and illegal leadership. Spanish stocks and bonds rallied.
U.K: Bank of England Governor Mark Carney is ready to raise interest rates from a position of economic weakness rather than strength.
The fastest inflation in four years leaves the U.K. central bank preparing to hike next month for the first time in more than a decade, yet it’s not an accelerating economy fanning those price pressures. Instead, policymakers are being pushed to temper less benign inflationary forces generated by weak productivity and Brexit.
The U.K. has fallen to the bottom of the Group of Seven growth rankings, but also of concern is the fact that it’s far less productive than international peers.
COMMODITIES: Oil held gains near $51 a barrel as OPEC Secretary-General Mohammad Barkindo reiterated a rapid market re-balancing is underway while predicting robust crude demand next year.
Futures climbed 0.4% in New York after advancing 3.3% in the previous two sessions. While the global economic recovery has gained traction, the current cycle of low prices is unprecedented, Barkindo said on Tuesday. Saudi Arabia’s output next month will drop to the lowest since January 2015, according to production plans published Monday by the energy ministry.
Macro Economic Indicators
Inflation rate (Y-o-Y) for August 2017 16.01%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at October 03, 2017, 32.740
Money Market Highlights
30 Day 20.7828
90 Day 21.2536
180 Day 22.8103
USD 1 Month 1.23722
USD 2 Months 1.27189
USD 3 Months 1.35639
USD 6 Months 1.52489
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 11-Jan-18 17.51
182d 19-Apr-18 19.22
364d 20-Sep-18 19.12
2y 23-Oct-19 14.58
3y 20-Sep-20 14.94
5y 27-Jan-22 15.83
Indicative Currency exchange rates
USDNGN ( I & I ) 355.00 356.00
EURUSD 1.1677 1.1879
GBPUSD 1.3007 1.3273
USDJPY 112.55 112.58
GBPEUR 1.1071 1.1277
USDZAR 13.6455 13.8489
EURNGN 423.75 425.15
GBPNGN 473.84 475.23