02 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Bureau of Public Enterprises has received technical and financial proposals from 54 potential investors interested in buying Nigeria’s electricity distribution companies. This is in keeping with timeline for the privatization of the distribution companies created from the unbundling of Power Holding Company of Nigeria PHCN which had July 31 2012 as deadline for receipt of technical and financial bids from the potential investors.
US: U.S. stocks rose, with the Standard & Poor’s 500 Index snapping a two-day decline, before the Federal Reserve concludes its policy meeting. European shares and Spanish and Italian bonds gained. The S&P 500 added 0.3 percent to 1,382.74 at 1:48 p.m. in New York yesterday. The Spanish two- year note yield dropped 34 basis points, falling for the fifth time in six days, with the similar-maturity Italian rate sliding 25 basis points.
INDIA: India’s cash-starved electric utilities, unwilling to buy power, are exceeding their allotments from the nation’s grid, which helped trigger the world’s biggest blackout, India’s chief electric regulator said.
Bonds – Light demand recorded across the curve on Wednesday with few trades closed, outlook expected to be relatively stable and a possible light sell-off on the long end of the curve.
Bills – Further dip recorded on bills on Wednesday, bringing yields to tight and negative carry spread as margins thin out between lending rates and bill yields, this trend isn’t sustainable given the direction of lending rates and recent policies to limit arbitrage opportunities between the CBN lending window and offer yields in the market.
Money Market – Cash markets remain volatile, OBB and O/N rate moved 150bps to 16.00% and 17.00% respectively, this is due to funding for FX auction, lending rates are expected to stay at this level due to the new directive from the CBN barring banks from participating at the WDAS auction during the tenor of an existing Repo or SLF transaction with the CBN.
CBN WDAS AUCTION
AMOUNT ON OFFER – $ 250MIO
AMOUNT SOLD – $ 250MIO
MARGINAL RATE – $/NGN 155.86
WEIGHTED AVERAGE RATE – $/NGN 155.89
Hi Low Close Prev.Close
USD/NGN 160.95/05 160.68/78 160.90/00 160.70/80
NIBOR (%) LIBOR (%)
O/N 16.9583 USD 1 month 0.2447
7 Day 17.1250 USD 2 month 0.3368
30 Day 17.2083 USD 3 month 0.4416
60 Day 17.4583 USD 4 month 0.5451
90 Day 17.5833 USD 6 month 0.6624
USD 12 month 0.9845
Y/Y Consumer Inflation June 2012 : 12.9%
FX Reserves: 30 July 2012 (USD bn) 36.500
Source: FMD and CBN