28 October 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Disturbed by increase in borrowings by banks through foreign lines of credit and issuance of foreign currency denominated bonds (Eurobonds), the Central Bank of Nigeria (CBN), has placed some restrictions on the raising of such funds by banks. Specifically, the central bank directed that the aggregate foreign currency borrowing of a bank excluding inter-group and inter-bank (Nigerian banks) borrowing should not exceed 75 per cent of its shareholders’ funds unimpaired by losses. The CBN stated this in a letter posted on its website on Monday, titled: “Prudential Regulation for the Management of Foreign Exchange Risks of Banks,” signed by its Director of Banking Supervision, Mrs. Tokunbo Martins. The letter addressed to all banks, noted the measures were part of prudential and hedging requirements to mitigate risks in the banking system and also to avoid losses that could pose material systemic challenges.
FX: Slight depreciation for the pair yesterday, printing at about 164.90/165.00 at close. We had some oil flows induced gains at open, pushing rates south to a 164.35 intraday low after opening at 164.65.
CBN RDAS AUCTION: CBN offered $500 million at yesterday’s RDAS, selling $498.95 million with marginal rate maintained at 155.76 (1% commission excluded).
FIXED INCOME: It was a steady start to the week. There was an OMO auction with NGN72.66 billion sold at 11% discount (11.55% yield). Some correction on the 22 January 15 bills (+52bps) but overall low volumes and yields were largely range bound in both tbill and bond market. NGN422bn liquidity (with another NGN234billion of OMO bills maturing on Thursday) and AMCON maturity distracting market from oil price.
CHINA: China’s industrial profit growth slowed in the first nine months, reinforcing signs of fragility in the world’s second-largest economy, as factories struggled with falling prices and softening domestic demand. Industrial companies made a combined profit of 4.37 trillion Yuan ($714.68 billion) between January and September, up 7.9 percent from a year earlier, the National Bureau of Statistics stated. This compares with a 10 percent rise in the first eight months.
EU: The European Central Bank spent 1.704 billion Euros last week on covered bonds under a new purchase program with which it hopes to foster lending to businesses and thereby support the euro zone economy. The purchases of covered bonds – debt backed by pools of home or commercial properties – are a new front in the ECB’s battle to revive the euro zone economy and keep deflation at bay. Inflation in the bloc is running at just 0.3 percent. The ECB began buying the bonds last week as part of a stimulus package it hopes will ease lending conditions and generate positive spill-over effects to other markets.
COMMODITIES: Brent slid in London. Brent for December settlement decreased as much as 68 cents, or 0.8 percent, to $85.15 a barrel on the London-based ICE Futures Europe exchange.
Macro Economic Indicators
Inflation rate (YoY) for Sept. 2014 8.30%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at October 24 2014 39.002
Money Market Highlights
NIBOR (%)
O/N 10.7100
30 Day 12.5670
90 Day 13.2579
180 Day 14.2501
LIBOR (%)
USD 1 Month 0.1525
USD 2 Months 0.1975
USD 3 Months 0.2326
USD 6 Months 0.3227
USD 12 Months 0.5418
Benchmark Yields
Tenor Maturity Yield (%)
91d 22-Jan-15 9.98
182d 23-Apr-15 10.84
364d 03-Sep-15 11.59
2y 16-Aug-16 12.45
3y 27-Apr-17 12.54
5y 29-Jun-19 12.69
Indicative Currency Exchange Rates
Bid Offer
USDNGN 164.55 165.25
EURUSD 1.2613 1.2815
GBPUSD 1.6020 1.6222
USDJPY 107.84 107.87
USDCHF 0.94345 0.9536
GBPEUR 1.2578 1.2782
USDZAR 10.8331 11.0365
JPYNGN 152.7397 152.8403
CHFNGN 172.88 174.57
EURNGN 208.81 210.17
GBPNGN 264.91 266.30
ZARNGN 14.03 15.96