17 January 2012, Sweetcrude, Lagos – Local and international financial market update.
· NIGERIA: Following the end of the strikes and an increase in Petrol prices to N97.00 per liter, Central Bank Governor said that he would consider keeping rates on hold “for a bit”. “I can’t predict MPC decisions as we have to look at a number of factors but my own instinct is that a monetary response to first round shocks of a fuel price increase would be pro cyclical and counter productive”. The next MPC meeting is scheduled for 20 January
· USA: With the US stock markets still be relatively depressed, the S&P 500 stock index in the US trades for a 13.6 times earnings down from 15.2 a year ago and 19% less than the average level since 1960. The US stock market fell 8% in 2011 as interest rates near record lows spurred companies to issue bonds instead of equities.
· EUROPE: The European Financial Stability Facility (EFSF), the Euro areas bailout fund lost its top credit rating at S&P. The rating was cut to AA+ from AAA. The EFSF’s obligations are no longer fully supported either by guarantees from ESFS members rated AAA by S&P or by AAA rated securities and credit enhancements sufficient to offset what S&P considers adequate are not in place.
· INDIA: The lenders to Kingfisher Airlines will meet today to discuss new loans to the unprofitable airline that seeks funds amid a cash shortage. State Bank of India considers its existing debt to the airline as bad loans as some repayments are due for moth than 90 days. The airline is seeking working capital loans to pay for operating expenses and fuel following 16 straight quarterly losses.
· CHINA: China’s economy expanded at the slowest pace in 10 quarters as export demand moderated and a prolonged campaign against consumer and property prices gains cooled growth. Gross Domestic Product (GDP) rose 8.9% in the fourth quarter from a year earlier. The report may increase pressure on Premier Wen Jiabao to tilt polices toward sustaining growth says certain market participants.
NIBOR(%) LIBOR (%)
O/N 13.4167 USD 1 month 0.2816
7 Day 14.0417 USD 2 month 0.4115
30 Day 15.1250 USD 3 month 0.5649
60 Day 15.5000 USD 6 month 0.7933
90 Day 15.8750 USD 12 month 1.1118
Y/Y Consumer Inflation November 2011 : 10.50%
FX Reserves: 4 January 2012 (USD bn) 33.09
Source: FMD and CBN