Financial Markets Today
Nigeria’s President – Muhammadu Buhari today, signed the 2019 budget into law, almost a month after it was approved by the Nigerian Parliament. The appropriation bill of ca ₦8.91 trillion ($29 billion), made up of ca ₦4.05 trillion of recurrent expenditure, ca ₦2.09 trillion for capital expenditure and ₦2.25 trillion for debt servicing, out of which ₦1.7 trillion was approved for domestic debt, ₦433 billion for foreign debts and ₦110 billion as sinking fund to retire maturing obligations, is the 2nd largest in the nation’s history, despite been ca -2.3% lower than 2018. The budget is based on an estimated oil production of 2.3 million barrels per day, assumed crude oil prices of $60pb, an exchange rate of ₦305/$1, average inflation rate at 9.98% and real GDP growth of 3.01%, has a budget deficit of ca ₦1.9 trillion to be financed by both domestic and foreign borrowings.
With the implementation of the budget to commence immediately after the President is sworn in for a second term on Wednesday the 29th of May, we expect the fiscal arm of government to expedite action in complementing the efforts of the Monetary authorities, in particular the Central Bank of Nigeria (CBN) in stimulating economic growth in 2019.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦99.8bn lower than ca ₦180.04bn recorded on Friday, as Banks made provisions for Wholesale FX funding. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
Mixed open to the week in the treasury bills secondary market today, in what was a rather quiet session, market witnessed some demand on the short-to-mid dated papers and sell offs at the long end of the curve. Average rates gained ca +3bps day-on-day, with the 29 August 2019 maturity trading the most to close at 10.78% from 10.73%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 14.50% and 15.29% from 11.14% and 12.00%, as Banks funded the Wholesale FX intervention. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
Bonds
The bonds secondary market kicked off the week on a very quiet note, with very few transactions across the curve. Average yields remained largely unchanged, with February 2028 maturity closing at 14.25%.
Eurobonds
A relatively quiet kick off to the week in the nation’s Eurobonds market today, with some demand on the short-to-mid dated maturities and very little activity on the longer dated papers. Average yields marginally shed ca -1bps day-on-day with the January 2049 maturity closing flat at 8.67%.
Equities
The Nigerian equities market kicked off the week on a negative note today, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -2.22% day-on-day to close at 30,194.71pts, with the market’s year-to-date returns at -3.93% as the market seems to have fully gotten over the initial boost provided the introduction of MTN Nigeria. This was largely due to losses in MTN Nigeria Plc (-7.14%) and Dangote Cement Plc (-4.00%).
The NSE Banking and Consumer goods indices both gained ca +102bps and +78bps respectively, while Industrial and Oil & Gas indices both lost ca -232bps and -39bps respectively. Fidelity Bank Plc led the volume chart with ca 28.27m units while MTN Nigeria Plc led the value chart with trades worth ₦1.44bn.
The Naira remained flat against the dollar in both the interbank and parallel markets at ₦306.90/$1 and ₦361/$1 respectively. It appreciated against the Pound sterling at ₦465/₤1 from ₦468/₤1 but was stable against the Euro at ₦404/€1, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦360.38/$1 from ₦360.40/$1.
Crude oil prices gained today, as OPEC supply cuts and tension from the middle east offset growing concerns of global economic slowdown due to lingering U.S./China trade tensions. Brent crude oil price gained ca +1.59% day-on-day at $69.78pb, while WTI gained ca +0.44% day-on-day at $58.89pb, as at report time. Spot gold gained ca +0.05% at $1,284.50 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 27-May-19 | 24-May-19 | Change in Rates | ||
| 90 Days | 11.24% | 11.35% | -0.11% | |
| 175 Days | 11.67% | 11.69% | -0.02% | |
| 336 Days. | 11.60% | 11.15% | 0.45% | |
| Source: FMDQ DQL for 27 May 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 27-May-19 | 24-May-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.44% | 14.44% | 0.00% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.36% | 14.35% | 0.01% | |
| 10 yrs: 13.98% 17 Mar 2028 | 14.25% | 14.25% | 0.00% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.45% | 14.45% | 0.00% | |
| Source: FMDQ DQL for 27 May 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 27-May-19 | 24-May-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.83% | 4.85% | -0.02% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.57% | 5.56% | 0.01% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 7.09% | 7.10% | -0.01% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 8.10% | 8.10% | 0.00% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.67% | 8.67% | 0.00% | |
| Source: FMDQ DQL for 27 May 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.23% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 01-Aug-19 | 66 | 9.90% | 10.08% |
| 17-Oct-19 | 143 | 11.00% | 11.50% |
| 07-Nov-19 | 164 | 11.00% | 11.57% |
| 16-Jan-20 | 234 | 11.05% | 11.89% |
| Select Macro-economic Indices | |
| Inflation % (April 2019) | 11.37 (+1.07% ytd) |
| PMI (May 2019) | 57.80 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 69.78 (+1.59% d/d) |
| External Reserve (US$’billion) | 45.068 (+2.12% ytd) |
| GDP % (Q4 2018) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 30,194.71 (-2.22% d/d; -3.93% ytd) |
| Market Capitalisation (₦’Trillion) | 13.30 |
Financial Markets Update – 27 MAY 2019
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