Financial market update

11 May 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: AMCON has declared its desire to seize assets belonging to debtors of intervened banks located within or outside the country if they do not willingly come forward to settle their indebtedness with the intervened financial institutions. AMCON also ruled out the possibility of granting forbearance to directors of the affected banks, whom it accused of collusion with managements of the affected banks in accumulating the Non Performing Loans.

EUROPE: Spain is underestimating potential losses by its banks, ignoring the cost of souring residential mortgages, as it seeks to avoid an international rescue like the one Ireland needed to shore up its financial system. The government has asked lenders to increase provisions for bad debt by 54 billion euros ($70 billion) to 166 billion euros. That’s enough to cover losses of about 50 percent on loans to property developers and construction firms, according to the Bank of Spain.

CHINA: In China, exports and imports rose slower in April than economists had estimated, adding pressure on the government to ease policies to spur expansion. Overseas shipments climbed 4.9 percent from a year earlier, the customs bureau said on its website yesterday. That compared with the 8.5 percent median estimate in a Bloomberg News survey of 33 economists. Import growth of 0.3 percent trailed forecasts for a 10.9 percent gain. The trade surplus was $18.4 billion, almost double the average estimate of $9.9 billion.

Bonds – Light demand recorded at the short end of the curve in reaction to the new cut-off rates from Wednesday’s primary t-bill auction, yields continue on its flat run on the longer duration of the yield curve. Monthly auction to hold next week with an expected supply of ngn70 bio via the 2017 and 2022maturities.

Bills – Yields dipped further in another bullish session, auction cut-off rates printed lower due to limited supply in the face of demand seen in recent times. OMO auction was also conducted on 105dy paper on Thursday with an additional ngn50 bio issued to mop-up any idle cash from the t-bill maturity inflow yesterday, likely profit taking moves expected today to close an all active week.

Money Market – OBB and O/N both close at 14.00% on square cash level in the money market. Liquidity level expected to hit debit today when FX funding takes place.

FX
                            Hi               Low           Close      Prev.Close
USD/NGN   157.70/80   157.28/38   157.50/60  157.60/70