22 January 2018, Sweetcrude, Houston, Texas — The local and international financial market products and services update.
NIGERIA: Nigeria’s central bank said on Monday a key interest rate setting meeting intended for January 22-23 will not be held due to an inability to form a quorum, adding that the benchmark rate will be maintained at 14%. The decision comes because there are not enough members of the Central Bank of Nigeria’s (CBN‘s) Monetary Policy Committee (MPC) to form a quorum, the lender said in a statement. “Under these circumstances, and in the absence of a meeting of the MPC, the CBN shall continue to maintain key monetary policy variables as decided by the last MPC meeting,”
FX: Despite the daily turnover average being 4% lower week-on-week to $284m, the FX liquidity in the I&E window was decent last week. Trades between banks were seen in the range of $/N 359 – 360.50. Flows were mainly driven by offshore appetite in the local fixed income.
Last week, the CBN held two auctions (retail and wholesale) and allocated FX to banks for invisible and SME transactions. At the wholesale auction, the Apex bank offered $100m for tenors not exceeding 60-day. Results of the retail auction held last are expected by the end of this week.
FIXED INCOME: Tone was generally bearish on Friday. Offshore and real money appetite for bonds has waned significantly and putting the market on the edge. Little demand seen was countered with sales particularly on the 2021s (+40bps). With most of the demand expected to emerge at the auction, bonds could still see some pressure to start the week. On offer this week for the Bond auction is 2021 – 50 Bn(5yr Re-opening) and 2027 60 Bn(10 CHINA: opening).
CHINA: This was supposed to be the year when Chinese companies caught a break, with the number of local bonds coming due dropping to the least since 2014. But it’s no longer looking so clear-cut.
The wrinkle? So-called put options, which give note holders the right to demand repayment even though the securities don’t mature until later years. Rising interest rates are making it more likely that investors will do just that — using the funds to buy recently issued bonds with higher coupons. There’s a record 1.25 trillion Yuan ($195.2 billion) of notes that could be put in 2018, more than three times last year, according to data compiled by Tianfeng Securities Co.
EURO: When euro-area finance ministers launch the process to find a new European Central Bank vice president on Monday, they won’t be flooded with nominations.
So far, only Spain has said it will put forward a candidate to replace Portugal’s Vitor Constancio, whose term expires at the end of May, with Finance Minister Luis de Guindos the most likely nominee.
The meeting in Brussels kicks off a two-year process to replace two-thirds of the ECB’s top officials that involves striking a balance between nationalities, gender and competency. A southern European choice such as Spain’s Guindos for the vice presidency would bolster the case for someone from the north of the continent to succeed President Mario Draghi. Germany, the region’s largest economy, has never held the post and Bundesbank head Jens Weidmann is widely seen as a potential successor to Draghi.
COMMODITIES: OPEC and Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signalled their readiness to cooperate beyond that.
Russia is prepared to continue cooperating with OPEC and its de-facto leader Saudi Arabia even after the cuts expire, Energy Minister Alexander Novak said in a Bloomberg television interview held jointly with his Saudi counterpart. Producers should keep limits on output through 2018 as the market may re-balance at the end of the year or in 2019, Saudi Energy Minister Khalid Al-Falih said. Neither minister said whether the cuts would continue in 2019.
Macro Economic Indicators
Inflation rate (Y-o-Y) for December 2017 15.37%
Monetary Policy Rate current 14.00%
FX Reserves (Moving Avg Bn $) as at January 18, 2018, 39,924
Money Market Highlights
NIBOR (%)
O/N 18.3000
30 Day 14.5355
90 Day 14.9428
180 Day 16.9643
LIBOR (%)
USD 1 Month 1.55613
USD 2 Months 1.63280
USD 3 Months 1.73408
USD 6 Months 1.86507
USD 12 Months 1.72400
Benchmark Yields
Tenor Maturity Yield (%)
91d 26-Apr-18 14.19
182d 19-Jul-18 15.38
364d 03-Jan-19 15.59
2y 13-Feb-20 13.68
3y 13-Dec-20 13.51
5y 27-Jan-22 13.29
Indicative Currency Exchange Rates
Bid Offer
USDNGN (I&E) 359.00 360.00
EURUSD 1.2141 1.2343
GBPUSD 1.3794 1.3998
USDJPY 110.79 110.82
GBPEUR 1.1249 1.1452
USDZAR 11.9354 12.1387
EURNGN 440.62 441.99
GBPNGN 500.22 501.61