09 February 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: The planned $2.50billion Eurobond will help to reduce Nigeria’s debt service-to-revenue ratio, the Debt Management Office (DMO) has said. Until last December when the nation’s debt-service-to-revenue ratio reportedly recorded a new decline to 45%, it had peaked at about 66%.
The Minister of Finance, Mrs. Kemi Adeosun had on Wednesday disclosed that the proposed $2.5 billion Eurobond already approved by the National Assembly would yield N762.5 billion proceeds for the refinancing of treasury bills.
The DMO in a statement Thursday affirmed that the proceeds would go into the refinancing of maturing domestic debt obligations of the federal government, adding: “It is not a new or incremental debt because it will not lead to an increase in the public debt stock.”
The agency stressed that the purpose is to rebalance the federal government’s debt portfolio by increasing the external component while reducing the domestic component. This, it noted, is in line with Nigeria’s Debt Management Strategy, which has a target of a 40:60 ratio for external to domestic debt, from the current position of about 25:75, respectively.
FX: Trading pattern in the I&E window remains unchanged as a result of a decent FX liquidity. Week to date we see turnover at $716.56, where 68% of the trades have been closed in the range of $/N 359 – 361.00.
FIXED INCOME: Liquidity conditions continue to be the main driver in bills.
However, yesterday’s maturity barely supported the secondary market because of the expected impact of OMO sales. N23bn of the 18th Oct 2018 bill was sold at 14.4% discount, bringing LCY liquidity to N42bn.
In the bond market, yields retraced across the curve with the 2036s and 2037s getting most of the support. We expect a quiet close to the week today.
SOUTH AFRICA : Top South African ruling party officials pulled out of events being staged to commemorate the centenary of the birth of national icon Nelson Mandela on Friday morning, as negotiations intensified over President Jacob Zuma’s exit from office.
The African National Congress’s top six officials had been called into an urgent meeting with Zuma, Johannesburg-based broadcaster eNCA reported. ANC spokesman Pule Mabe said he didn’t have details on the meeting.
Zuma has shrugged off a succession of scandals during his nine-year tenure as president, but pressure has been mounting on him to quit since Cyril Ramaphosa won control of the ruling party in December.
CHINA: China’s ability to export inflation to the world appears to be waning, right at a time when investors are worried that global prices are taking off amid faster economic growth.
Factory prices, which feed through into the prices export customers pay, are continuing to soften, suggesting the world’s biggest trading nation won’t be passing on much more by way of inflation in the near term. The producer price index rose 4.3% in January from a year earlier, its third month of slowing, and consumer prices climbed 1.5%.
COMMODITIES: Oil headed toward its worst week in almost a year as the global risk-asset rout further rankled investors already concerned over growing U.S. supply.
Futures traded in New York are on track to post a 7.5% slump this week as everything from equities to currencies tumbled. Adding to the alarm was data that showed U.S. oil production at a new high, and key technical indicators pointing to a further retreat in prices. Now West Texas Intermediate is spiralling toward $60 a barrel, all but erasing this year’s gain.
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 February 07, 2018 41,005
Money Market Highlights
30 Day 15.1270
90 Day 15.5093
180 Day 16.5182
USD 1 Month 1.57957
USD 2 Months 1.66899
USD 3 Months 1.78902
USD 6 Months 1.99214
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 10-May-18 14.88
182d 09-Aug-18 15.07
364d 31-Jan-19 16.03
2y 13-Feb-20 14.10
3y 17-Jan-21 13.83
5y 27-Jan-22 13.64