17 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Federal Government of Nigeria may increasingly shift its borrowing mix from Naira to Dollar denominated debt, as it moves to curb domestic borrowing and boost the local economy. Ngozi Okonjo-Iweala, coordinating minister of the economy told representatives of the organized private sector and civil society in Abuja last week that she intended to launch a sinking fund in the 2013 budget. The purpose of the fund would be to retire some of the FGN’s domestic bonds and reduce the annual domestic borrowing requirement to N500 billion medium term.
EUROPE: The ECB opposed efforts to restructure Greek sovereign debt and refused to take losses on Greek government bonds held on its balance sheet earlier this year. European officials are now debating how best to rescue Spain’s banks after its leaders requested 100 billion euros ($122 billion) of international aid last month, becoming the fourth euro nation to seek help after Greece, Ireland and Portugal.
CHINA: China recorded its weakest expansion in three years in the second quarter when its economy advanced 7.6 percent from a year earlier, a government report in Beijing showed July 13.
INDIA: Indian stocks declined for a fourth day, its longest losing run since May, as forecast of deficient seasonal rains outweighed optimism the central bank would lower interest rates after inflation unexpectedly eased last month. BSE India Sensitive Index, or Sensex, lost 0.6 percent to 17,103.31 at the close yesterday.
Bonds – Bearish outlook for the week just ahead of the auction on Wednesday, with NGN75 bio to be offered on the 5yr, 7yr and 10yr bond. Trend to be sustained into the auction where cover trades and reinvestment will be executed.
Bills – Light buying interest recorded on short-dated bills in the market yesterday, though some correction recorded on the last issued 91dy and 182dy paper which came up 31bps in yesterday’s session.
Money Market – OBB and O/N rate down 100bps and 125bps to 14.00% and 14.25%.
CBN WDAS AUCTION
Offered: 200mio Sold: 200mio
Marginal rate: 155.87
Weighted average: 155.93
Hi Low Close Prev.Close
USD/NGN 162.06/16 161.35/45 161.50/60 162.06/16
NIBOR (%) LIBOR (%)
O/N 14.7917 USD 1 month 0.2478
7 Day 15.1250 USD 2 month 0.3408
30 Day 15.7500 USD 3 month 0.4551
60 Day 16.0833 USD 4 month 0.5531
90 Day 16.2917 USD 6 month 0.7284
USD 12 month 1.0660
Y/Y Consumer Inflation May 2012 : 12.7%
FX Reserves: 13 July 2012 (USD bn) 36.429
Source: FMD and CBN