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N243bn Treasury Bills to Mature this Week

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IMAGE: CBN Head Office, Abuja »

June 14, 2013


Treasury bills valued at a total of N242.649 billion are expected to mature this week. Data gathered from the Financial Market Dealers Association (FMDA) showed that the short-term money market instrument would mature from both the primary market auction (PMA) and open market operations (OMOs) windows of the market.

A breakdown of the amount showed that while a total of N108.082 billion treasury bills of various tenors would mature at the OMO, N134.567 billion from various tenors would also mature at the PMA. Specifically, the treasury bills expected to mature at the OMO  include 120-day (N20.295 billion), 115-day (N4.530 billion), 114-day (N34.998 billion), 111-day (N19.444 billion) and 93-day (N28.815 billion) respectively. On the other hand, the treasury bills expected to mature at the PMA include 91-day (N31.838 billion), 182-day (N42.729 billion) and 364-day (N60 billion).
However, in line with its restrictive monetary policy stance, it is expected that the Central Bank of Nigeria (CBN) would issue sufficient amount of securities to absorb the excess liquidity that would emerge from the process.

The Nigerian Interbank Offered Rates (NIBOR) climbed to an average of 13.48 per cent last Friday, compared with the 12.62 per cent it attained the preceding Friday.  According to the FMDA data, whereas the Call tenor rose to 12.58 per cent on Friday, from 11.79 per cent the preceding Friday, the 7-day tenor also climbed to 12.87 per cent on Friday, from 12.12 per cent the preceding Friday. Similarly, just as the 30-day tenor advanced to 13.25 per cent on Friday, from 12.46 per cent the preceding Friday, the 60-day tenor jumped to 13.50 per cent, from 12.62 per cent the preceding Friday. Also rates for the 90-day, 180-day and 365-day short-term funds climbed to 13.75 per cent, 14.04 per cent and 14.37 per cent respectively.

But the trend is expected to reverse this week, following last week’s distribution of funds to the three tiers of government by the Federation Account Allocation Committee (FAAC). FAAC had distributed the N156 billion controversial February arrears as well as N620.656 billion as allocation for the month of May.
Exchange Rate
Unlike the preceding week, the naira strengthened against the United States dollar at the interbank segment of the forex market. This was largely attributed to the central bank’s intervention.

THISDAY gathered that in line with its promise to save the nation’s currency from further depreciation, the central bank sold the greenback directly to commercial banks and also intervened through the two-way quote system of the forex market yesterday.  According to reliable market sources, the central bank sold about $150 million directly to banks. Through the two-way quote system, the CBN either sells or buys dollars to operators having received their bid or offer rates.
Therefore, the naira gained N3.7 to close at N159 to a dollar at the interbank last Friday, compared to the N162.70 to a dollar it sold the preceding Friday. However, the nation’s currency shed 50 kobo at both the Bureau De Change and parallel market segments respectively where it closed at N162.50 to a dollar and N163 to a dollar on Friday.
At the regulated Wholesale Dutch Auction System (WDAS), the CBN offered a total of $600 million to dealers, same as the preceding week, just as the naira maintained its value of N155.75 to a dollar at the bi-weekly market.

NSIA and General Electric
The Nigeria Sovereign Investment Authority (NSIA) last week signed a memorandum of understanding (MoU) with the General Electric (GE) to develop and finance projects in the healthcare, aviation, transportation and power sectors in Nigeria. Under the MoU, the GE and NSIA would seek opportunities to collaborate such that the NSIA’s role as a financial investor and GE’s role as an original equipment manufacturer would complement each other to achieve the strategic objectives of the agreement through partnership with relevant, credible, public and private sector entities.
Managing Director and Chief Executive Officer (CEO), NSIA, Mr. Uche Orji, said: “This marks an important milestone for the NSIA in its efforts to enhance the development of infrastructure in Nigeria and encourage foreign investment. We look forward to developing a constructive relationship with GE.”

Fitch Ratings

Slow progress on government reforms before the 2015 elections in Nigeria is keeping the country from getting a better credit rating, Fitch Ratings said last week. “We are clearly in a pre-election period now in Nigeria and we have seen a slowdown on the reform front,” Fitch’s London-based Head of Middle East and Africa Sovereign Ratings, Richard Fox said. “We judge Nigeria by what they achieve and some of their more ambitious plans may not come to fruition until after the election,” he added.

Fitch’s comments came a month after Moody’s Investors Service said Nigeria’s slow implementation of structural economic reforms was limiting the country’s chances of a credit-rating upgrade, along with corruption, weak institutions and vulnerability to oil-price drops.
FAAC Meeting

A meeting of the Federation Account Allocation Committee (FAAC) was last week reconvened following an agreement reached by a committee set up by President Goodluck Jonathan to resolve the stalemate arising from the sharing of federally collected revenue among the three tiers of government.
The committee, which is headed by Bauchi State Governor, Mallam Isa Yuguda, was constituted by the president following a meeting with the state governors in Abuja. The forum of Commissioners of Finance of Nigeria (FCFN), which has representatives from the 36 states of the federation, had walked out of the monthly meeting of FAAC over allegations of unpaid arrears amounting to about N160 billion. In a bid to resolve the stalemate, Jonathan had met with the governors and had set up the Yuguda committee.
KYC Update for DNFBPs
In consideration of the challenges encountered by some Designated Non-financial Businesses and Professions (DNFBPs) in complying with the Know-Your-Customer (KYC) requirement, the CBN last week announced a new deadline of December 31st, 2013, from the April 30th that had elapsed. DNFBPs include dealers in jewelry, precious metals and stones, dealers in cars and luxury goods, chartered/professional accountants, audit firms, tax consultants, clearing and settling companies, lawyers and notaries, independent legal practitioner and supermarkets. Others are hotels and other businesses in the hospitality industry, trust companies service providers, casinos (including internet and ship-based Casinos),   estate surveyors, valuers and real estate agents, religious and charitable organisations, pool betting, lottery and non-governmental organisations. The CBN said the reason for the extension to December was a result of some challenges encountered by SCUML as a result of the number of persons seeking to enjoy late compliance.
Subsidy Claims
As part of the federal government’s renewed commitment to ensure availability of petroleum products at subsidised prices, the Federal Ministry of Finance last week stated that it had paid a total of N192, 502, 279, 966.50 as subsidy claims to marketers since the beginning of 2013.
The Special Adviser to the Coordinating Minister for the Economy and Minister of Finance, Mr. Paul Nwabuikwu, said that of the figure, N135,696,269,214.05 was paid to the marketers in respect of verified arrears of 2011 and 2012 claims.
Nwabuikwu said the balance of N56,806,010,752.45 was paid to 19 marketers in respect of 2013 verified claims for 39 different transactions as at June 10, 2013. He said the payment was in line with the continued commitment of the Federal Ministry of Finance to manage fuel subsidy payments in a transparent and efficient manner that protects and enhances the interests of the Nigerian people.

Nigeria’s $1bn Eurobond
Nigeria’s positive track record and visibility among emerging-market investors as well as the country’s robust external balance sheet were last week identified as factors that would stimulate demand for the planned $1billion Eurobond. The country’s marginal foreign debt of 2.2 per cent of GDP and forex reserves of about 48.47 billion were also macroeconomic indicators expected to weigh positively on the proposed dollar-denominated debt.
Emerging Markets Strategist, Standard Bank Plc, Mr. Samir Gadio, said this in a note to THISDAY. Additionally, the financial market analysts stressed that Nigerian Eurobond had also typically generated meaningful domestic demand from local financial institutions that had supported the various sovereign and corporate issues.


Article Credit: Thisday Newspaper

Updated 6 Years ago

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